Changes lead paragraph to say ... denying ..., not declining.
(Recasts, adds Sony Ericsson comments)
TOKYO, March 10 (Reuters) - Sony Ericsson, a joint venture between Sony Corp (6758.T) and Ericsson (ERICb.ST), said it would continue developing cellphones for NTT DoCoMo Inc (9437.T), denying a newspaper report that it plans to substantially scale back its mobile business with Japan’s top wireless operator.
The Nikkei business daily said on Monday that Sony had decided to stop cellphone development and production for DoCoMo, and that it would instead procure handsets from other mobile phone makers and supply them to DoCoMo under the Sony Ericsson brand.
Sony Ericsson spokesman Toshiyuki Kawamura said the firm had no plans to terminate product development for DoCoMo phones and that it had no intention to buy phones from other Japanese cellphone makers on an original equipment manufacturing (OEM) basis for shipments to DoCoMo.
In an OEM deal, a manufacturer makes products under a buyer’s brand name. Kawamura said, however, that Sony Ericsson is reviewing its product strategy for DoCoMo. He declined to elaborate.
Sony currently makes Sony Ericsson phones for the Japanese market.
Sony Ericsson is the world’s fourth-largest mobile phone maker but ranks just sixth in the Japanese market, whose heavy development costs make it tough to turn a profit.
The Nikkei said Sony Ericsson would stop development and production for DoCoMo after supplying new models this summer.
Sony considered exiting the Japanese mobile phone market altogether, but has decided to keep developing and making phones for No. 2 operator KDDI Corp (9433.T) for now, given their alliance in music distribution, the paper said.
Sony is the sole Japanese mobile phone maker with a substantial global presence, while many other cellphone producers in Japan are struggling to compete with Nokia NOK1V.HE and other giants overseas and face a saturated domestic market.
Mitsubishi Electric Corp (6503.T) announced last week that it would exit the market, while Sanyo Electric Co Ltd 6764.T said in January that it would sell its money-losing cellphone business to Kyocera Corp (6971.T).
Sony shares were down 4.6 percent at 4,400 yen by midday, underperforming the Nikkei average .N225, which lost 1.4 percent. (Reporting by Nathan Layne and Kiyoshi Takenaka, editing by Chris Gallagher)