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Sony Ericsson gets booster shot

A $326 million injection from the two companies shows an ongoing commitment to their mobile phone joint venture, which has been toiling to make a profit.

Sony and Ericsson are showing ongoing commitment to their mobile phone joint venture by giving it roughly a $326 million funding injection.

The two companies have greeted the new year with a new round of funding for their struggling mobile phone joint venture, laying to rest fears about Sony Ericsson's immediate future.

Sony Ericsson Mobile Communications, a 50-50 joint venture, will get about $157.4 million (96 million British pounds), from each of its corporate parents during the quarter ending 31 March, the companies said Wednesday. "This capital injection represents the continuing commitment of Sony and Ericsson to the joint venture," the companies said in a joint statement.

Sony Ericsson was formed to join Ericsson's engineering expertise with Sony's consumer electronics experience, but has failed to make much headway in market share. It has been stuck at around 5 percent globally for the past year, has lost roughly $106.6 million per quarter.

Last summer doubts about Ericsson's commitment to the venture arose when the Wall Street Journal quoted Ericsson Chief Executive Kurt Hellstrom saying that he might cut off Sony Ericsson's funding if it didn't show results in the next two quarters.

The venture's sales are climbing, albeit slowly. It sold about 115 million units worldwide in the fourth quarter and about 395 million during 2002, compared with about 390 million in 2001, the company announced Wednesday. It expects to sell a total of 435 million units in 2003, an increase of 10 percent.

However, analysts have said they do not expect Sony Ericsson to turn a profit unless it doubles its market share.

After a longer-than-expected process of integrating the two companies' product lines and engineering teams, Sony Ericsson has begun introducing several new products that have been well-received by reviewers. After the successful launch of color-screen T68i, the long-anticipated P800 Smartphone is expected to be available shortly.

ZDNet U.K.'s Matthew Broersma reported from London.