Ericsson/Sony handset joint venture in trouble

OXFORD, United Kingdom—Plans to combine the technical and marketing skills of Ericsson and Sony for a fresh assault on the handset market appear to be in trouble. Reports from Japan claim that Ericsson is becoming increasingly worried about the success of the project following the recall earlier this year of more than 1 million Sony-made handsets.
After a high-level PR display when the two firms signed a memorandum of understanding (MOU) in April, a formal contract has yet to be agreed upon between the two manufacturers. Sony confirmed that the process was taking a little longer than expected, but insisted talks were still on track and joint development work would definitely start on 1 October. The original statements called for the London-based venture, to be branded Sony Ericsson Mobile Communication, to employ more than 3,000 staff and start rolling out new products in the first half of next year.
However, decreased demand and mounting stockpiles have forced Sony to revise an earlier net profit forecast for the year down 40 percent. The cell phone recall is also thought to have hurt the company badly, although no actual figure has been released.