Report: Ericsson looking to exit handset business

Ericsson is reportedly considering exiting the handset business and splitting from its joint venture with Japan's Sony, according to a report in the German publication Manager-Magazin.

Sony is considering buying out Ericsson's 50 percent share in the joint venture, according to the report, which cited unnamed sources close to the discussions. Exiting the handset business would allow Ericsson to focus on its core competencies as an infrastructure vendor and a network manager. However, Sony has not been performing well of late, and the company saw its profit plunge 95 percent in the fourth quarter. Sony is negotiating with banks to finance the purchase of Ericsson's share, according to the report.

Ericsson posted a 31 percent drop in net profit for the fourth quarter, and said in January that it would cut 5,000 jobs. It also said at the time that it had received a substantially smaller contribution in its earnings from Sony Ericsson than in the year-ago period. Sony Ericsson reported a $246 million loss for the fourth quarter, down from a profit of $495 million in the year-ago period, as sales dropped amid weakening consumer demand during the economic recession.

At deadline, Ericsson had not responded to inquiries about this. Sony representatives could not be reached for comment. Sony Ericsson denied rumors in early February that the company planned to split up.

For more:
- see this Manager-Magazin report [1]
- see this article [2]

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