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News
Issue #2001 - 36
(September 2001)
(Updated
Sept. 5, 2001)
ACQUISITIONS,
MERGERS & AGREEMENTS
Ericsson and Sony on the Road to
Completing Joint Venture Deal
Swedish telecom equipment maker
Ericsson and Japanese consumer electronics group Sony Corp. have
agreed to the terms of the merge that will see their mobile phone
businesses come under Sony Ericsson Mobile Communications, subject
to final approval of their respective Boards and subject to
regulatory approval. In April, Sony and Ericsson announced an agreement
in principle to establish a London-based company, which would be
equally owned by both companies, with the mandate to design and
manufacture next-generation mobile phones.
In a joint statement, the companies
said that the new company would be in operation by October 1. With
an initial workforce of 3,500 employees, the company will be
responsible for all mobile phone design, marketing, sales and
production, which are currently undertaken by the parent companies.
Many analysts see the joint venture
as a means of injecting profitability into both companies’
money-losing handset units and challenging market leaders Nokia and
Motorola.
The new company will produce a new
brand of cell phones, expected in the second half of 2002. This will
not impede the promotion of current models under existing Sony and
Ericsson brand names.
For more information:
http://www.ericsson.com
Mobileinfo Comments and Advisory: Handset
design, development and manufacturing industry is going through a
significant change. Efficiency of large monolithic and integrated
organizations is under attack for a simple reason - intellectual
property in design can be a separate profit center as compared to
manufacturing. Both Motorola and Ericsson have realized that -
interestingly only under depressed economic environment. In theory, the
decision is a sound one. Ericsson's design prowess can be combined with
Sony's core expertise in miniaturization, consumer electronic product
manufacturing, multi-media and retail distribution. If the original
intent was to challenge Motorola, Ericsson should have known that if
some strategic formula is good for it, it might be a good for Motorola
too. Will Nokia sit around doing nothing. However, Ericsson did pick a
strong partner.
Note: This news release may contain
forward-looking statements. Readers should take appropriate caution in
developing plans utilizing these products, services and technology
architectures. All trademarks used in this summary are
the property of their respective owners.
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