• Sweden edition
 
Ericsson and Sony go separate ways

Ericsson and Sony go separate ways

Published: 27 Oct 2011 08:49 GMT+02:00
Updated: 27 Oct 2011 21:06 GMT+02:00

Swedish telecom equipment giant Ericsson confirmed on Thursday that it would sell its stake in mobile phone joint venture Sony Ericsson to Sony for €1.05 billion ($1.47 billion).

"Sony will acquire Ericsson's 50 percent stake in Sony Ericsson... making the mobile handset business a wholly-owned subsidiary of Sony," Ericsson said in a statement.

The Japanese-Swedish group was created in 2001, combining the then unprofitable handset operations of Ericsson and Sony to today become the sixth-biggest player in the global market.

In its statement, Ericsson pointed out that the mobile phone market has changed dramatically over the past decade, with focus shifting heavily to smartphones.

Ericsson CEO Hans Vestberg called the 10-year-old venture a "perfect match" at the time, the move to separate was nevertheless a "logical step".

"We will now enhance our focus on enabling connectivity for all devices," Vestberg said in a statement, pointing out that the Swedish company aimed to concentrate on the wireless market as a whole, "using our R&D (research and development) and industry leading patent portfolio to realise a truly connected world."

Sony meanwhile will with the deal secure "a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology."

The two companies said they would continue working together, announcing they had set up a "wireless connectivity iniative ... to drive and develop the market's adoption of connectivity across multiple platforms."

Ericsson said the transaction had been approved by both companies but was still pending regulatory approvals. It is expected to close in January, 2012.

"The transaction will result in a positive capital gain for Ericsson which will be defined after closing of the transaction," the company said.

"This day is an important milestone for Sony Ericsson and smarthphone users across the world," Sony Ericsson CEO Berg Nordberg said in a statement.

"As a part of Sony, we can take advantage of Sony's technology, content, and services to develop and improve our portfolio."

While hailing the past decade's partnership with Ericsson, Sony president and chief executive Howard Stringer pointed out that the market had drastically shifted since 2001 from focusing on loss-making simple mobile phones to highly profitable smartphones.

The separation from the Swedish company was therefore a logical and strategic step that would enable Sony to more efficiently deliver devices that can connect to each other and open up new entertainment possibilities, he told a news conference in London.

By taking full control, Sony can integrate its smartphone operation with its tablet, hand-held game console and personal computer businesses to save on costs and better synchronise development of mobile devices.

The move comes as Sony's competitors such as Apple of the United States and Samsung Electronics of South Korea forge ahead with closely coupled strategies for smartphones and tablet computers.

Analysts say the move would help accelerate Sony's efforts to push its vast library of content through its game consoles, smartphones and tablet computers to face up to competition from Apple's iTunes and App store.

"The transaction gives Sony an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices -- including tablets, televisions and personal computers," Stringer said in a statement.

Last year, Sony Ericsson posted a net profit of €90 million, compared to a net loss in 2009 of 836 million.

By the third quarter this year, touch-screen smartphones accounted for 80 percent of the joint venture's sales.

Thursday's announcement followed weeks of rumours Sony was looking to buy out Ericsson from the joint venture and analysts said they were not surprised, with the terms in line with expectations.

Canalys analyst Pete Cunningham said the deal in fact was "the only feasible option."

"If nothing had happened, Sony Ericsson would most probably have died in the next 18 months due to problems it has had to differentiate its handset products," he told Dow Jones Newswires.

"With the acquisition, Sony now has all components to compete directly with Apple and Samsung," he added.

Investors responded positively to the news, with Ericsson's share price closing up more than 4.0 percent, in line with the overall Stockholm stock exchange.

TT/AFP/The Local (news@thelocal.se)

Don't miss...X
Left Right

Your comments about this article

09:54 October 27, 2011 by faizans80
Good for both !!

Ericsson want to lead but they cant compete in all areas. So better to focus on ther "Network connectivity thingy"
10:04 October 27, 2011 by Exiled
The best move for Ericsson, but potentially a sad day for those employed by Sony Ericsson in Lund.
08:20 October 28, 2011 by mikewhite
Yes, not a single mention of the fate of the Swedish S-E sites.
10:13 October 28, 2011 by Zeffanyx
Well, it all started with Ericsson, and now end up with Sony. There had been several posts about Lund's office cutting the staff amount and it was the move to what we see now: Sweden no longer produces high-tech phones, nor will it do any significant R&D soon.

I really loved Ericsson phones, though :)
11:01 October 28, 2011 by mikewhite
With Saab and Volvo, it was one of Sweden's trademark industrial icons.

I wonder if their handsets will be as popular in the Nordic countries when the link with Ericsson goes.
00:34 October 29, 2011 by salalah
It always was a strange marriage....
Today's headlines
Florida 'mystery knight' dies in Sweden
Michael Boatwright (R) and Medieval knight re-enactors.

Florida 'mystery knight' dies in Sweden

The "motel mystery" American who baffled US authorities by only speaking Swedish when he woke up from a coma last year has passed away, Swedish media reported on Wednesday. READ () »

Swedes open coffin of 850-year-old king
Photo: Bertil Ericson/TT

Swedes open coffin of 850-year-old king

UPDATED: Scientists pried open the 850-year-old casket of King Erik the Holy on Wednesday, hoping to find out more about the king, his crown, and his eating habits. READ () »

TeliaSonera announces first-quarter profit drop
TeliaSonera CEO Johan Dennelind. File photo: TT

TeliaSonera announces first-quarter profit drop

Stockholm-listed telecom operator TeliaSonera on Wednesday said profits had fallen in the first quarter, but hoped offering customers more data solutions in the future would turn things around. READ () »

'Imperfect EU better than revolting nationalism'
Fredrik Reinfeldt. File photo: TT

'Imperfect EU better than revolting nationalism'

Swedish Prime Minister Fredrik Reinfeldt on Wednesday urged young voters to head to the European parliamentary polls on May 25th "to cure the European disease of nationalism". READ () »

Ericsson quarterly profit defies sluggish sales
Ericsson CEO Hans Vestberg at the first quarter press conference. Photo: TT

Ericsson quarterly profit defies sluggish sales

Swedish telecom giant Ericsson on Wednesday announced a drop in sales but posted a sharp rise in first-quarter profit, which nonetheless fell shy of analyst predictions. READ () »

Fatal Norrköping brawl
Four brothers held as cops fear brawl reprisals
Photo: Johan Nilsson/TT

Four brothers held as cops fear brawl reprisals

Swedish police fear that several people involved in a brawl in eastern Sweden on Monday night may be seeking revenge after two brothers were shot dead. READ () »

Sponsored Article
Beautiful pearls of southeast Sweden
The town of Västervik.

Beautiful pearls of southeast Sweden

Ask a Swede, and they are likely to say that their favourite holiday spot is in the southeast of Sweden. Eastern Småland and Öland offer a smörgåsbord of all the things dearest to the Swedes - from the beloved children's book author Astrid Lindgren to deep forests, long sandy beaches, perfect spots for that all-important 'fika', and a surprising amount of space, peace and quiet. READ () »

Weekend weather to bring summer warmth
Swedes enjoy hot dogs and cherry blossoms in Stockholm's Kungsträdgården. Photo: Jessica Gow/TT

Weekend weather to bring summer warmth

The sun is set to stick around and temperatures could climb into the twenties over the weekend, Swedish meteorologists said on Wednesday READ () »

'Day-care rapist' admits molesting eight kids

'Day-care rapist' admits molesting eight kids

A 21-year-old man confessed on Wednesday to sex crimes against eight children at a day care where he was working as an intern. READ () »

Swedish cops nab man for having big muscles
An unrelated bodybuilder. File photo: Ann Törnkvist

Swedish cops nab man for having big muscles

Police in Sweden's south who hauled a muscular man in for steroid testing have had their knuckles rapped, after it was ruled that big biceps cannot be grounds for narcotics suspicions. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
TT
Gallery
Inside the 850-year-old king's coffin
Features
Sponsored: South-eastern Sweden offers Öland beaches and more
Gallery
Swedish underwear shop puts staff in front of the camera
Gallery
IN PICTURES: The Local's Property of the Week - Täby
Sponsored: India+Sweden Week - India Unlimited
Features
Sponsored: India+Sweden Week - A film, food, and finance feast
National
University applications rocket to record high
finest.se
Gallery
People-watching April 18-20
TT
Society
Kids in Victorian garb mark Swedish Easter
Shutterstock
National
Swedish MP ordered chemtrail probe
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
finest.se
Gallery
People-watching April 16
Advertisement:
Politics
Who's the prime minister's heir?
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

712
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com