Japanese electronics giant Sony is nearing a deal to buy Ericsson's (NASDAQ:ERIC) portion of their decade-old 50-50 joint venture Sony Ericsson in a bid to integrate the handset company with its tablets and gaming consoles, according to a report in the Wall Street Journal.
The report, which cited unnamed sources familiar with the matter, said that Sony wants to gain control over Sony Ericsson to save money and better align mobile device development. One source said the talks between Sony and Ericsson are ongoing and could fall apart. Representatives from Sony, Ericsson and Sony Ericsson declined to comment, according to the Journal.
There have been rumblings in the past that Sony might buy Ericsson's portion of the joint venture. Sony apparently wants to get control of the company to better compete with the likes of Apple (NASDAQ:AAPL) and Samsung, which have integrated smartphone and tablet offerings. Buying Ericsson's stake could cost between $1.3 billion and $1.7 billion, the report said, citing analyst estimates.
Sony Ericsson posted a net profit of $120.1 million in 2010 after quarters of losses. The company, which has undertaken a transition to smartphones by relying on Google's (NASDAQ:GOOG) Android operating system, has watched its market share shrink from 4.3 percent in the third quarter of 2009 to 1.7 percent in the second quarter this year, according to research firm Gartner.
There have also been recent indications that Sony Ericsson is moving more toward a product alignment with Sony. The handset maker's Xperia Play Android phone is essentially a mobile Sony PlayStation device married to a phone, and has access to Sony's video game library. Additionally, Sony Ericsson's flagship Android phones, including the Xperia Arc, connect to Sony TVs through DLNA technology.
- see this WSJ article (sub. req.)
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