Sony and Ericsson to Inject $1.3 Billion in Their Joint Venture

The struggling Japanese – Swedish joint venture Sony Ericsson is reported to need a cash infusion from its parent companies in order to pass through the rough financial problems that affect it. According to The Financial Times, the mobile phone maker might be in need of as much as $1.3 billion by the end of the ongoing year.

As many of you might already know, the company lost a lot of money lately, and, although it tried to cut down its expenses, it still reported a net loss of €293 million ($384 million) during the first quarter of 2009, while its global market share went as low as 6 percent. Currently, Sony Ericsson is placed fourth among the worlds largest phone makers.

Due to the economical problems the manufacturer has been through lately, Ericsson was rumored several times to plan on leaving the joint venture, while Sony was reported to consider acquiring the entire entity, though Ericsson put an end to these speculations last month, when it announced that it intended to put more money in the joint venture in case it needed it.

On the other hand, Ericsson’s CEO Carl-Henric Svanberg is now reported to have stated that Ericsson might eventually sell out, while Sony was “a logical buyer.” At the same time, Sony said the following: “Our first order of business, as is Ericsson’s, is the success of the joint venture. We are committed to supporting Sony Ericsson in this difficult economic environment.”

According to The Financial Times, both companies are considering the possibility of injecting more capital in the company, or acting like guarantors on a loan. Svanberg is reported to have said that the move was “not unlikely,” while Sony seems to have stated that “should that become necessary we are, of course, prepared to support Sony Ericsson in that way.” The joint venture, Nomura analysts state, could need around €500 million from each of the companies before the end of the year.