Following Friday’s report in the Wall Street Journal that Ericsson may pull the plug on its handset venture with Sony, its fellow parent has stepped in to defend the new company. Kunitake Ando, president of the Japanese electronics firm said there is no change in his company’s or Ericsson’s commitment to Sony Ericsson. Ando claimed that the support and commitment of both parents has not changed, despite some recent poor results at the venture and concerns over future handsets sales. Sony Ericsson made a loss of US$83 million in the three months ended to 30 June.

Insight

Sony Ericsson is becoming something a political football. Ericsson needs to show investors it has firm control over costs and the ability to abandon unprofitable activities. There may also be a degree of sabre-rattling ahead of any joint funding round, by which Ericsson may hope to force Sony to contribute more than its fair share of investment. PMN’s previous articles on this subject stressed there was no immediate danger of Ericsson pulling out and these comments from Sony underscore the medium-term nature of these concerns.