LM Ericsson and Sony Corp announced yesterday they will go their separate ways as Ericsson sells its 50 percent stake in mobile phone maker Sony Ericsson to Sony for 1.05 billion euros (US$1.46 billion).
Sony Ericsson will become a wholly owned subsidiary of Sony and integrated into Sony's broad platform of network-connected consumer electronics products, the Japanese company and Swedish wireless equipment firm said.
The transaction gives Sony an opportunity to quickly integrate smartphones into its portfolio of network-connected consumer electronics device, such as tablets, televisions and personal computers, they said.
The move was widely anticipated by analysts, who have argued Sony Ericsson could become more competitive in the tough smartphone market under sole Sony ownership.
Shares in Ericsson rose by 4.3 percent to 69.55 kroner (US$10.6) in early Stockholm trading, while Sony stock climbed 5.4 percent to 1.65 yen (US$21.7) before closing in Tokyo.
"I believe this improves the outlook for Sony Ericsson, because Sony can take full responsibility for the company and use the unique things that they have," said analyst Greger Johansson with research firm Redeye. "The opportunity to integrate the phones with their other products improves."
Ericsson and Sony combined their unprofitable handset ventures into the joint venture Sony Ericsson in 2001 and enjoyed some early successes with its Walkman and Cyber-shot phones.
In recent years it has suffered from the competitive climate in the smartphone market and earlier this month the company posted a break-even third quarter result.
The company adopted Google's Android operating system for its smartphones in 2008, and has said it now controls about 11 percent of the Android-based smartphone market. Its Android-based Xperia smartphones account for more than 80 percent of its sales.
Yesterday's deal will provide Sony with an intellectual property cross-licensing agreement, covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology. "We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment," Sony CEO, Sir Howard Stringer said.
The agreement is expected to close in January 2012.