Sony Ericsson needs US$1.3bn of refinancing, as mistakes surface

The Sony Ericsson handset JV is beginning to look increasingly shaky as the CEO of Ericsson admitted that it might need to pump more cash into the loss-making venture, and hinted that Sony would be the logical partner to acquire the entire concern. However, while neither company has mentioned the numbers involved, one financial analyst claimed that the two partners would need to invest a total of US$1.3 billion by year-end to keep Sony Ericsson (SE) afloat.

As speculation mounted regarding SE's future, the CEO, Hideki Komiyama, seemed unconcerned about the impact of talking through the mistakes the company had made. Notable among these were:

  • The Xperia X1 - intended as a rival to the iPhone, was little more than an experiment.
  • The strategy of basing its smartphones on the Symbian derivative UIQ was a mistake.
  • The handset portfolio was flawed, with product groups acting in isolation.

Having freely admitted that the company was ‘unfocused', Komiyama gave fresh impetus to the rumour that SE would in the future consider a gaming-oriented phone based on the famous PlayStation brand. SE is believed to have pitched a PSP phone to Sony some time last year but had been given the cold shoulder, so perhaps this renewed enthusiasm for the PSP phone provides an indication that Sony is becoming more influential in the future product strategy of SE.

A measure of SE's problems was illustrated in the Q1 handset shipment figures recently released by Strategy Analytics. This indicated that SE saw its numbers fall by 40 percent in the quarter, only outdone by Motorola with a 46 per cent drop.

For more on this story:
Electronista and Smart Brief

Related stories:
Stability on the horizon, says Sony Ericsson, but still cuts 2000 jobs
Sony, Ericsson may inject cash into joint venture
Sony Ericsson need marriage guidance not divorce
Sony Ericsson Reports First Quarter Results

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