Swedish telecommunication equipment maker L.M. Ericsson Telephone Co. and Japanese consumer electronics company Sony Corp. have finalized the terms of a merger of their mobile phone businesses, the companies said Tuesday.
The 50-50 joint venture, called Sony Ericsson Mobile Communications, is on track to start operating on Oct. 1, Ericsson and Sony said in a statement.
Ericsson and Sony announced the merger of their mobile phone operations in April. A new mobile phone brand will be launched, with the first products due out in the second half of 2002. Sony Ericsson Mobile Communications will have an initial workforce of 3,500 employees. Together Sony and Ericsson sold about 50 million phones last year, with a pro forma revenue of US$7.2 billion, the companies said Tuesday.
The joint venture should be profitable from the start, Ericsson said in April.
Ericsson, the world's third largest handset vendor in 2000, has been battling losses at its handset business and is losing market share. Sony plays a marginal role on the worldwide cell phone market with a share of less than 1 percent in 2000, according to figures from research firm Dataquest Inc.
The downturn in the mobile phone market has led to massive job cuts at Ericsson. The formation of the joint venture remains subject to the approval of the boards of both companies and regulators, the companies said.