TOKYO (Reuters) ? Sony Corp is nearing a deal to buy Telefon AB LM Ericsson's half of their smartphone venture, The Wall Street Journal reported Thursday, signaling a possible fresh push by Japan's No. 1 electronics brand to regain ground lost to rivals Apple Inc and Samsung Electronics.
Sony and Ericsson have been talking for weeks about the future of the venture because the companies must decide this month whether to renew their 10-year-old pact, two industry sources told Reuters.
The Wall Street Journal said the talks were ongoing and could break apart at any time, citing people familiar with the matter.
Ericsson and Sony declined to comment on the reported talks. "We have a long-term commitment to our joint ventures," said an Ericsson spokesman.
"The talks are not something that have been announced by Sony. We are declining to comment," said Mami Imada, a Sony spokeswoman in Tokyo.
Many analysts say Japan's Sony needs to assert control over Sony Ericsson if the venture is to recoup market share in the cut-throat world of smartphones.
Sony's shareholders, however, appeared wary of any deal that would burden the company's finances. Its stock dipped as much as 1.8 percent to 1,444 yen in early trading compared with a 1.2 percent gain in the benchmark Nikkei 225.
The joint venture, formed in 2001, thrived after its breakthrough with Walkman music phones and Cybershot cameraphones, both of which leveraged Sony's brands.
But it lost out to bigger rivals Nokia and Samsung Electronics at the cheaper end of the market, and was late to react to Apple's entrance into the high-end of the market.
It has refocused its business to make smartphones using Google's Android platform, but it has dropped to No. 9 in global cellphone rankings from No. 4 just a few years ago.
It is making some progress and turned a net profit of 90 million euros last year after booking a loss of 836 million euros in 2009. But it reported another loss for the April-June quarter.
The venture is due to report its September quarter results on Oct 14.
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"A buyout would make a lot of sense for Ericsson as I believe their share in the joint venture is worth to them between zero and minus 1 billion euros," said Bernstein analyst Pierre Ferragu.
"Whatever price they agree on, it would be a positive for Ericsson."
Shares in Sweden's Ericsson gained on the report and closed 6 percent higher at 69.20 crowns on Thursday.
A full takeover of the venture would boost Sony's overall offering, which includes content, gaming devices, consumer electronics and even tablet computers. But the company still lacks its own smartphones.
"The buyout allows Sony to move development in-house and better integrate other products like gaming into newer phones," said Steven Nathasingh from U.S. technology research firm Vaxa Inc.
Last month at the IFA trade fair in Berlin, Sony Ericsson's phones were presented inside the Sony hall, mixed with Sony's TV sets and new tablets.
(Additional reporting by Yinka Adegoke, Anna Ringstrom, Sven Nordenstam, Liana Balinsky-Baker, Tim Kelly; Editing by Erica Billingham and Joseph Radford)
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