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Sony To Stick With Ericsson Joint Venture

A split seemed imminent after Sony Ericsson reported that demand for its phones plunged and that the drop in demand would cause a substantial first-quarter loss of between $465 million and $533 million.

With losses in their joint venture piling up, mobile phone provider Sony Ericsson moved Monday to head off rumors of a breakup by renewing their partnership vows. Sony said it's committed to the partnership.

"We will continue to be committed to the joint venture," said a Sony spokesman, according to published reports in Tokyo.

Rumors of the Sony Ericsson joint venture breaking up were fueled late last week when the partnership reported that demand for its phones was plunging and that the drop in demand would cause a substantial first-quarter loss of between $465 million and $533 million.

Virtually all mobile handset providers have been negatively impacted by the global economic meltdown, but Sony Ericsson has been particularly hard hit. In addition, new phones like Apple's iPhone and Google's G1 Android phone are representing new and vigorous competitors in the handset marketplace.

Sony Ericsson's strength in midrange phones has been particularly hard hit as low-end phones have held up because of sales gains in emerging markets. The high end, represented by the iPhone, BlackBerrys, HTC, and other handsets, has also done relatively well. Earlier this year, Sony Ericsson said it planned to improve its offerings in phone cameras -- a feature that would draw on Sony's strength in digital cameras.

In Tokyo, the Sony spokesman said the projected first-quarter loss is already reflected in its forecast for its full fiscal year ending March 31. Earlier, most of the unsubstantiated rumors of a pending breakup implied that Ericsson favored leaving the partnership.

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