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Ericsson Wants Out Of Sony Ericsson Joint Venture

According to a German technology magazine, Ericsson is seeking ways to end its part in the Sony Ericsson joint venture. Ericsson and Sony are in talks to work out a plan, but apparently financing the deal is a big problem.

German publication Manager-Magazin.de is reporting that Ericsson recently approached Sony to talk about the two companies' mobile phone joint venture Sony Ericsson.

Ericsson wants out.

Excuse me while I have a Keanu Reeves moment: Whoa.

Sources familiar with the matter say that Sony has agreed, in theory, to the idea of acquiring Ericsson's 50% stake in the joint venture, but there's one tiny, little roadblock: Funding.

Sony doesn't have the cash to buy out Ericsson's share of the company, so it is exploring ways to finance the deal. Neither company has officially commented on the matter, nor has any sort of timeline been given.

This raises some serious issues. Sony Ericsson is a top player in the worldwide market for cell phones. It has held steady in the top five for years. It is known for its Walkman and CyberShot series phones, which focus on providing excellent music and camera experiences, respectively.

Why does Ericsson want out now? Is this a response to the current economic climate? Sony Ericsson has reported dismal numbers of late, but they don't appear to be too far out of line with general market trends.

What would be the financial and market-share fallout of such a divestiture? Could a standalone version of Sony, phonemaker, survive? Does Sony have the wireless technical expertise to match what Ericsson provided? Would Sony maintain its pledge to bring Symbian Foundation handsets to market, or would it renege and choose something else?

These are all unanswered at the moment. We'll have to keep a close eye on this as this deal moves forward.

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