Not a Name Change, a Game Change
Ericsson will divest its interest in the Sony Ericsson joint venture, but the parent companies say it’s not a divorce. Rather, the phone-making part of the business will go back into Sony with its consumer electronics expertise, and Ericsson will continue to enable wireless connectivity in all devices, no matter who the manufacturer is.
The two companies have set up the Wireless Connectivity Initiative, which the CEOs from both companies described in a morning press conference in London as "a way to enable the ecosystem of wireless technology in all consumer electronics."
Sir Howard Stringer, the Chairman, CEO and President of Sony, reviewed the joint venture’s accomplishments in 10 years, saying that Sony Ericsson has developed great design, a global brand and good consumer relationships. He said there are more smartphones than people in the United States, which exemplifies the change in the marketplace and a good reason for a change in Sony Ericsson’s structure. He said the two companies will work closely together on the new initiative.
Known for his sense of humor at press conferences, Sir Howard said: "Ericsson has been a wonderful partner. We will continue to have a relationship because … Hans Vestberg and I are the same height."
Ericsson President and CEO Vestberg agreed that the relationship will continue, and that the divestiture is "a natural step for us. Ericsson will continue to be number one in wireless technology and services, and we will continue to work with many different types of devices that are connected to the internet."
Vestberg continued: "Ten years ago, the feature phone was the most direct connection to the network. It was odd to put a wireless technology leader with a consumer device manufacturer. Now, there are many more devices connecting to the network and doing so much more than voice services.
"Sony and Ericsson have had an exciting time together," Vestberg said.
At the time of the joint venture’s formation, Sony and Ericsson were each losing money on making phones. Together, they built a company that most recently reported positive results with a 33 percent increase from the second quarter of 2011 to the third quarter of 2011.
The deal calls for a cash payment of EUR 1.05 billion from Sony to Ericsson and includes five essential patents to be transferred from Ericsson to Sony. It is expected to be complete by the end of January 2012.
The two companies have set up the Wireless Connectivity Initiative, which the CEOs from both companies described in a morning press conference in London as "a way to enable the ecosystem of wireless technology in all consumer electronics."
Sir Howard Stringer, the Chairman, CEO and President of Sony, reviewed the joint venture’s accomplishments in 10 years, saying that Sony Ericsson has developed great design, a global brand and good consumer relationships. He said there are more smartphones than people in the United States, which exemplifies the change in the marketplace and a good reason for a change in Sony Ericsson’s structure. He said the two companies will work closely together on the new initiative.
Known for his sense of humor at press conferences, Sir Howard said: "Ericsson has been a wonderful partner. We will continue to have a relationship because … Hans Vestberg and I are the same height."
Ericsson President and CEO Vestberg agreed that the relationship will continue, and that the divestiture is "a natural step for us. Ericsson will continue to be number one in wireless technology and services, and we will continue to work with many different types of devices that are connected to the internet."
Vestberg continued: "Ten years ago, the feature phone was the most direct connection to the network. It was odd to put a wireless technology leader with a consumer device manufacturer. Now, there are many more devices connecting to the network and doing so much more than voice services.
"Sony and Ericsson have had an exciting time together," Vestberg said.
At the time of the joint venture’s formation, Sony and Ericsson were each losing money on making phones. Together, they built a company that most recently reported positive results with a 33 percent increase from the second quarter of 2011 to the third quarter of 2011.
The deal calls for a cash payment of EUR 1.05 billion from Sony to Ericsson and includes five essential patents to be transferred from Ericsson to Sony. It is expected to be complete by the end of January 2012.
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