Nokia Oyj, the world's biggest cellphone maker, and Sanyo Electric Co, the largest handset-battery producer, will ally to make cellphones for the US market, targeting ¥30 billion (US$256 million) in profit in two years.
The two companies plan to make handsets using the high-speed CDMA2000 standard from the third quarter of this year, according to a statement from Osaka-based Sanyo yesterday. The venture will have operations in Osaka, Tottori, western Japan and San Diego, California, Sanyo said. No financial details were provided.
Nokia and Sanyo are aiming to raise sales in North America to compete against Motorola Inc and LG Electronics Inc, the top two suppliers of mobile phones in the region. The venture may help spur Sanyo's earnings growth after the Japanese company received a ¥300 billion bailout from banks last month.
PHOTO: EPA
An alliance "would be positive news because there's severe competition in the North American market and grabbing market share has been an issue for Sanyo," Eiichi Katayama, an analyst at Nomura Securities Co, wrote in a report before the announcement. He rates Sanyo shares a "sell."
Espoo, Finland-based Nokia is also aiming to benefit from increased demand for more advanced phones to spur sales as markets in Europe and the US near saturation and prices drop.
Yesterday, Nokia said it will start selling a handset that lets customers make calls over the Web.
The venture, which will be set up as a separate company, plans to sell 35 million units annually, Takenori Ugari, the president of Sanyo's mobile phone business, said at a news conference in Tokyo yesterday.
Nokia's third-quarter US market share was 13.7 percent, behind Motorola's 33.5 percent, LG Electronics Inc's 19.8 percent and Samsung Electronics Co's 15 percent, according to Framingham, Massachusetts-based researcher IDC. Two years ago, Nokia had 30 percent of the market, according to Credit Suisse.
President Olli-Pekka Kallasvuo, who takes over as chief executive officer from Jorma Jaakko Ollila on June 1, in August said he expects to revive Nokia's fortunes in the US. Nokia aims to win clients with phones tailored to specific phone companies to boost handsets kept in stock by operators, Jari Honko, an analyst at eQ Bank Ltd in Helsinki, said last month.
Sanyo last month said it will sell preferred stock to Goldman Sachs Group Inc, Sumitomo Mitsui Financial Group Inc and Daiwa Securities SMBC Co to fund job cuts and other restructuring programs. The share sale will give the three banks 49.8 percent of Sanyo and five of nine board seats, and is pending approval from shareholders on Feb. 24.
Sanyo needs cash to pay for a three-year plan to cut 15 percent of its workforce, close factories and invest in solar panels, rechargeable batteries and other environment-related businesses. The company is also looking to raise money by selling real estate and shares of other companies it owns, and cutting executive salaries.
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