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Ericsson soon to be bought out by Sony

Thursday, 06 October 2011
Sony said to be close to buying out Ericsson from mobile phone manufacturer Sony Ericsson. Ericsson's shares are valued at Skr9 to Skr11 billion. Analysts are surprised that a separation has not already happened by now.

“My guess is that these kinds of discussions have been held for a long time,” said Hakan Wranne, telecoms analyst at Swedbank.

Swedish media reported quoting the U.S. Wall Street Journal which also, citing sources familiar with, the deal saying the deal is imminent. Japanese Sony would integrate the mobile phone portion among the company's other products, so as to save money, according to reports.

Analysts value the Ericsson shares to reach some Skr9 and 11 billion. Neither company would comment on the press reports.

Wranne also said that he is surprised that a separation has not taken place before now.
“It's pretty obvious that Sony alone has more opportunities to make something of the Sony Ericsson than they have together. With Sony's assets, knowledge and market position in consumer electronics Ericsson's part of the whole is rather a burden.”

Wranne also points out that Sony Ericsson had problems with profitability and believes that Ericsson would benefit from a split:
“For Ericsson’s part, there are no strategic advantages to owning a consumer-goods business in this way.”

Sony Ericsson was established in October 2001 when Ericsson mobile business went on its knees. The company reported a loss of SEK 390 million for the second quarter of 2011, largely due to poor sales in Japan after the earthquake in the spring.
By Scancomark.se Team

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