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Sony Still Committed To Ericsson Cell Phone Partnership

Rumors of a Sony Ericsson breakup were fueled by the partnership's loss of up to $533 million in the first quarter.
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.

"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 their 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. Low-end phones have held up because of sales gains in emerging markets. The high end, represented by the iPhone, BlackBerry, HTC, and similar handsets, has also done relatively well. Earlier this year, the Sony Ericsson joint venture 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 the company's forecast for its full fiscal year ending March 31. Most of the previous rumors of a pending breakup implied that Ericsson favored leaving the partnership.

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