Sony Ericsson gets cash boost
Published: 29 Jan 2003 12:28 GMT
Sony and Ericsson have greeted the new year with a new round of funding for their struggling mobile phone joint venture, laying to rest fears about Sony Ericsson's immediate future.
Sony Ericsson Mobile Communications, a 50:50 joint venture, will get 150m euros, or about £96m, from each of its corporate parents during the quarter ending 31 March, the companies said on Wednesday. "This capital injection represents the continuing commitment of Sony and Ericsson to the joint venture," the companies said in a joint statement.
Sony Ericsson was formed to join Ericsson's engineering expertise with Sony's consumer electronics experience, but has failed to make much headway in market share. It has been stuck at around 5 percent globally for the past year, while losing about £65m per quarter.
Last summer doubts about Ericsson's commitment to the venture arose when The Wall Street Journal quoted Ericsson chief executive Kurt Hellstrom saying that he might cut off Sony Ericsson's funding if it didn't show results in the next two quarters.
The venture's sales are climbing, although slowly. It sold about 115 million units worldwide in the fourth quarter and about 395 million during 2002, compared with about 390 million in 2001, it announced on Wednesday. The company expects to sell a total of 435 million units in 2003, an increase of 10 percent.
However, some analysts have said they do not expect Sony Ericsson to turn a profit unless it doubles its market share.
After a longer-than-expected process of integrating the two companies' product lines and engineering teams, Sony Ericsson has begun rolling out several new products that have been well-received by reviewers. Following on the heels of the successful colour-screen T68i, the long-anticipated P800 smartphone is expected to be available shortly.
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