Download - Teletimes

Sony to acquireEricsson’s share of Sony EricssonHans Vestberg, CEO - EricssonEricsson (NASDAQ: ERIC)and Sony Corporation(“Sony”) announced that Sonywill acquire Ericsson’s 50 percentstake in Sony Ericsson MobileCommunications AB (“SonyEricsson”), making the mobilehandset business a whollyownedsubsidiary of Sony.The transaction gives Sony anopportunity to rapidly integratesmartphones into its broad arrayof network-connected consumerelectronics devices – includingtablets, televisions and personalcomputers - for the benefit ofconsumers and the growth ofits business. The transactionalso provides Sony with a broadintellectual property (IP) crosslicensingagreement covering allproducts and services of Sony aswell as ownership of five essentialpatent families relating towireless handset technology.As part of the transaction, Ericssonwill receive a cash considerationof EUR 1.05 billion.During the past ten years themobile market has shifted focusfrom simple mobile phones torich smartphones that includeaccess to internet services andcontent. The transaction is alogical strategic step that takesinto account the nature of thisevolution and its impact on themarketplace.This means that the synergiesfor Ericsson in having both aworld leading technology andtelecoms services portfolio and ahandset operation are decreasing.Today Ericsson’s focus is onthe global wireless market as awhole; how wireless connectivitycan benefit people, businessand society beyond just phones.Consistent with that mission, bysetting up a wireless connectivityinitiative, Ericsson and Sonywill work to drive and developthe market’s adoption of connectivityacross multiple platforms.“This acquisition makes sensefor Sony and Ericsson, and itwill make the difference forconsumers, who want to connectwith content wherever theyare, whenever they want. Witha vibrant smartphone businessand by gaining access toimportant strategic IP, notablya broad cross-license agreement,our four-screen strategy is inplace. We can more rapidly andmore widely offer consumerssmartphones, laptops, tabletsand televisions that seamlesslyconnect with one another andopen up new worlds of onlineentertainment. This includesSony’s own acclaimed networkservices, like the PlayStationNetwork and SonyEntertainment Network,” saidSir Howard Stringer, Sony’sChairman, Chief Executive Officerand President. Mr Stringeralso noted that the acquisitionwill afford Sony operationalefficiencies in engineering,network development andmarketing, among other areas.“We can help people enjoy allour content – from movies tomusic and games – through ourmany devices, in a way no oneelse can.”“Ten years ago when we formedthe joint venture, thereby combiningSony’s consumer productsknowledge with Ericsson’stelecommunication technologyexpertise, it was a perfect matchto drive the development offeature phones. Today we takean equally logical step asSir Howard StringerChairman & CEO - SonySony acquires our stake in SonyEricsson and makes it a part ofits broad range of consumer devices.We will now enhance ourfocus on enabling connectivityfor all devices, using ourR&D and industry leading patentportfolio to realize a truly connectedworld” said HansVestberg, President and CEO ofEricsson.When Sony Ericsson started itsoperations on October 1, 2001, itcombined the unprofitable handsetoperations from Ericssonand Sony. Following a successfulturnaround the company hasbecome a market leader in thedevelopment of feature phonesby integrating Sony’s strongconsumer products knowledgeand Ericsson’s telecommunicationstechnology leadership. TheWalkmanTM phone and CybershotTMphone are well knownLina Al Desoukyexamples.With the successful introductionof the P1 in 2007, Sony Ericssonearly on established itself inthe smartphone segment. Morerecently, the company has successfullymade the transitionfrom feature phones to AndroidbasedXperia smartphones.By the end of the third quarterof 2011, Sony Ericsson held amarket share of 11 percent (byvalue) in the Android phonemarket, representing 80 percentof the company’s third quartersales. During its ten years inoperation Sony Ericsson hasgenerated approximately EUR1.5 billion of profit and paiddividends totalling approximatelyEUR 1.9 billion to its parentcompanies.Prominent models include ”XperiaTMarc” and “XperiaTM mini”which received 2011 EISAAwards, while recent notableadditions to the lineup include“XperiaTM PLAY” and “XperiaTMarc S”.The transaction, which hasbeen approved by appropriatedecision-making bodies ofboth companies, is expected toclose in January 2012, subjectto customary closing conditions,including regulatory approvals.Ericsson has accounted forits 50 percent share in SonyEricsson according to the equitymethod. Following completionof the transaction, Ericsson willhave no outstanding guaranteesrelating to Sony Ericsson andwill no longer account for SonyEricsson as an investment onbalance sheet. The transactionwill result in a positive capitalgain for Ericsson which willbe defined after closing of thetransaction.December 2011www.teletimesinternational.com43