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Sony, Ericsson Pour More Cash Into Joint Venture

The companies will inject $325.9 million into the struggling handset venture. Separately, Sony's profit nearly doubles.
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Consumer electronics giant

Sony

(SNE) - Get SONY GROUP CORPORATION SPONSORED ADR Report

and wireless-equipment maker

Ericsson

(ERICY)

will inject another 300 million euros ($325.9 million) to keep their struggling handset joint venture afloat.

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The infusion of cash brings a momentary end to speculation that the joint venture will be shuttered. Ericsson last summer publicly indicated that it would stop funding the money-losing venture if it couldn't achieve a 10% market share or reach break-even by the end of last year.

Nonetheless, executives from Sony and Ericsson appeared to dial back expectations in deciding to continue operations. The two companies each own 50% of the venture. Each will contribute 150 million euros.

At the end of the third quarter last year, the company's cell-phone shipments fell 30.4% compared with the third quarter of 2001, according to research firm Gartner Dataquest. Its market share tumbled to 4.8% from 7.4% in the prior year.

The joint venture said it sold 7.1 million units in the fourth quarter, about 4% higher than the comparable period last year, and 42% higher than the third quarter. It lost 69 million euros, on an 18% rise in sales to 1.2 billion euros in the quarter.

The company estimates about 115 million phones were sold in the entire industry in the quarter, and about 395 million phones were sold globally. It also projects 435 million units will be sold by the wireless industry in 2003.

Separately, Sony said its profit nearly doubled in the third quarter to 125.4 billion yen ($1.06 billion), on moderately higher sales of 2.3 billion yen. But the company warned that it may come up short in the full year due to slumping U.S. spending.

Sony's American depositary receipts tumbled 64 cents, or 1.6%, to $40.51. Ericsson ADRs gained 8 cents, or 1%, to $7.96.