Ericsson may want to withdraw from the mobile phone business, according to a report from the German publication Manager-Magazin.

The company is a 50% partner with Sony in Sony Ericsson, but it may want to focus on backend telecommunications infrastructure as the economy declines. This souring economic climate is going to hit the mobile phones hard in the short term, as the market is expected to decline in 2009.

"In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn," Sony Ericsson president Dick Komiyama said. "We foresee a continued deterioration in the marketplace in 2009, particularly in the first half."

Sony Ericsson is still one of the top five cell phone manufacturers in the world, but companies like Apple, Research In Motion, and Nokia are giving it stiff competition in the high-end handset market. Unlike Motorola and Samsung, Sony Ericsson doesn't have a broad portfolio of entry-level handsets to bolster sales in emerging markets like China and India.

Sony has reportedly expressed interest in completely taking over the mobile handset business if Ericsson wants out. But it may have trouble coming up with the cash because Sony, like other consumer electronic manufacturers, is being hit with slumping revenue due to decreased consumer demand.

An Ericsson spokesman said it doesn't comment on "rumors and speculations," but CEO Carl-Henric Scanberg did reiterate the company's commitment to the mobile phone joint venture during a recent interview with the Financial Times. Sony didn't respond to press inquiries for comment.

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