Sony in talks to buy Ericsson out of phone JV

Sony Corporation is in talks to buy out Ericsson from their mobile phone joint venture in a bid to catch up with rivals, a source with direct knowledge of the matter said. The move could help Sony recoup ground in the battle against Apple Inc and Samsung Electronics, where it has been hampered by a disjointed strategy regarding mobile gadgets and online content. Tablets, games devices and other consumer electronics are offered by Sony, while smartphones come from Sony Ericsson. Sony and Sweden’s Telefon AB LM Ericsson have been talking for weeks about the future of the 50:50 joint venture because the companies must decide this month whether to renew their 10-year-old pact, two industry sources told Reuters. A source with direct knowledge of the matter told Reuters on Friday Sony was discussing a buyout. The source did not want to identified because the talks were not public. Yoshiharu Izumi, an analyst at J.P. Morgan in Tokyo, said the deal could be worth upwards of $1.3 billion, depending on what agreement the two reach about the continuing use of Ericsson’s telecoms patents. “Up to now Sony’s products and network services have all been separate. Unifying them would be positive,” Izumi said. “If they can leverage their games and other network services I think they can lift their share,” he added. Should any buyout go ahead, Sony will need to take steps to protect itself from legal challenges to its patents. Thus far the joint venture has been protected from the kind of court room challenges seen by rivals because Ericsson, the world’s largest mobile telecom gear maker, holds one of the largest patent portfolios in the industry. “Sony will definitely want to bolster its portfolio in such a deal so it can defend itself in the most litigious segment of the technology industry,” said intellectual property expert Florian Mueller. The Wall Street Journal said in a report on Thursday the talks between the two companies were ongoing and could break up at any time, citing people familiar with the matter. Ericsson and Sony declined to comment on the 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. 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. Sony’s shareholders, however, appeared wary of any deal that would burden the company’s finances. Its stock fell 3.7 per cent to 1,415 yen on Friday, compared with a 1 per cent gain in the benchmark Nikkei 225 index. The deal might come at a bad time for Sony, which is also taking part in an auction for British music company EMI in which the owner is seeking to fetch $3 billion or more. ( From The Gulf Today )