LM Ericsson and Sony Corp. announced Thursday they will go separate ways as Ericsson sells its 50 percent stake in mobile phone maker Sony Ericsson to Sony for $1.46 billion.

The North American headquarters for the joint venture was once located in Research Triangle Park, N.C.

In 2009, the company decided to move its headquarters to Atlanta and a research and development operation that also was based in RTP to California.

The headquarters is now located in the Buckhead area of Atlanta.

Sony Ericsson will become a wholly owned subsidiary of Sony and integrated into Sony’s broad platform of network-connected consumer electronics products, the Japanese company and Swedish wireless equipment firm said.

The transaction gives Sony an opportunity to quickly integrate smartphones into its portfolio of network-connected consumer electronics device, such as tablets, televisions and personal computers, the companies said.

The move was widely anticipated by analysts, who have argued Sony Ericsson could become more competitive in the tough smartphone market under sole Sony ownership.

The deal will help Sony tap demand for smartphones as Japan’s largest exporter of consumer electronics is seeking a new earnings driver after losing a total of $6.3 billion from its main television operation in the past seven fiscal years. Full control of the venture will add smartphones using Google Inc.’s Android system to Sony’s device business, while freeing Ericsson to concentrate on sales of wireless transmission equipment and services.

“The deal will increase management freedom at the mobile phone unit to speed up development of new products,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages about $28 billion in assets. “It’s up to products whether Sony can survive in the wireless industry.”

Sony Ericsson has turned to smartphones based on Android to lessen market share losses amid competition from Apple Inc.’s iPhone. The company aims to distinguish itself from rivals through its integration with Sony’s entertainment range and distinctive hardware designs such as the Xperia Play, an Android phone with Playstation console controls and games.

Lofty goal, declining market share

Ericsson and Sony set up the venture on Oct. 1, 2001, giving themselves five years to dethrone Nokia Oyj as the world’s biggest mobile-phone maker. Sony Ericsson’s market share slid to 1.7 percent in the second quarter from 3 percent a year earlier, according to researcher Gartner.

“I believe this improves the outlook for Sony Ericsson, because Sony can take full responsibility for the company and use the unique things that they have,” said Greger Johansson, an analyst with research firm Redeye. “The opportunity to integrate the phones with their other products improves.”

Johansson said the smartphone market is “extremely tough” and Sony Ericsson’s competitors are also developing quickly.

He said the price Ericsson received wasn’t great, but it will be a relief for the Swedish company to be able to focus on its core wireless equipment business and offload the mobile phone maker that has taken up a lot of management time.

“Sony Ericsson has no strategic value for Ericsson anymore,” added Helena Nordman-Knutson, an analyst with Ohman Fondkommission in Stockholm.

Ericsson and Sony combined their unprofitable handset ventures into the joint venture Sony Ericsson in 2001 and enjoyed some early successes with its Walkman and Cyber-shot phones.

In recent years it has suffered from the competitive climate in the smartphone market and earlier this month the company posted a break-even third quarter result.

The company adopted Android for its smartphones in 2008, and has said it now controls about 11 percent of the Android-based smartphone market. Its Android-based Xperia smartphones account for more than 80 percent of its sales.

Sony reaction

Thursday’s deal will provide Sony with an intellectual property cross-licensing agreement, covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology.

“We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment,” Sony CEO, Sir Howard Stringer said, adding this includes Sony’s own network services, the PlayStation Network and Sony Entertainment Network.

Stringer said the acquisition will also afford Sony operational efficiencies in engineering, network development and marketing.

The transaction is subject to customary closing conditions, including regulatory approvals, but has been approved by appropriate decision-making bodies of both companies.

Ericsson reaction

Ericsson said the shift in the mobile market, from simple mobile phones to smartphones that include access to internet services and content, means the synergies for the company in having both a telecoms services portfolio and a handset operation have decreased.

“Ten years ago when we formed the joint venture, thereby combining Sony’s consumer products knowledge with Ericsson’s telecommunication technology expertise, it was a perfect match to drive the development of feature phones. Today we take an equally logical step as Sony acquires our stake in Sony Ericsson and makes it a part of its broad range of consumer devices,” said Ericsson CEO Hans Vestberg.

Ericsson said it will now focus on the global wireless market as a whole and how wireless connectivity can benefit people, business and society beyond just phones.

Ericsson and Sony will also set up a wireless connectivity initiative aimed at driving and developing the market’s adoption of connectivity across multiple platforms, they said.

The agreement is expected to close in January 2012.

(Bloomberg news contributed to this report.)

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