Analysts see a strong chance that Japanese consumer electronics giant Sony <6758.T> will succeed in buying out its joint-venture partner in mobile phone handset maker Sony Ericsson in the next half-year for around 10.6 billion Swedish crowns ($1.5 billion).
A source with direct knowledge of the matter told Reuters on Friday that Sony was in talks with Ericsson
The Wall Street Journal had reported talks between the two companies on Thursday.
Both companies declined to comment.
A poll of 12 analysts by Reuters put the chance of a deal within six months at greater than 60 percent. The most skeptical analyst rated the possibility 50/50 and the most optimistic at 90 percent.
The lowest value put on Ericsson's 50 percent share in Sony Ericsson, which built its success on the Walkman and Cybershot phones, was 7 billion crowns, and the highest 15.5 billion.
Analysts have long seen Sony Ericsson, formed in 2001, as a sideline to Ericsson's main business of selling networks and services.
Yet Ericsson has been unwilling to exit, saying it needs end-to-end capability, meaning a text message or voice call from one phone to another might never leave an Ericsson platform.
Analysts say that is no longer necessary.
Ericsson's contribution to JV's success in the future is minimal since the battlefield has moved from hardware to content and services, said Alexander Peterc, analyst at Exane BNP Paribas.
We have always advocated a disposal of Sony Ericsson to Sony -- the move makes a lot of sense for both parties.
Analysts said it was hard to see Sony Ericsson consistently making money under its current ownership structure and that Ericsson faced the possibility Sony Ericsson would need more cash in future.
Sony, however, has a better chance of making the business a success.
It will be able to integrate Sony Ericsson's smartphones in its stable of tablets, games devices and other consumer electronics, allowing it to compete better with the likes of Apple
Sony also has a wide portfolio of content, such as its music catalog, movies and TV shows.
They (Sony Ericsson) are one of many Android phone makers and it is difficult to differentiate (yourself) if you don't have it as part of a bigger strategy, which Sony does, said Swedbank analyst Hakan Wranne.
He said Ericsson has signaled recently that it no longer considers Sony Ericsson a strategic asset.
The majority of analysts polled also expected Ericsson would cut ties with its loss-making chipset joint venture ST-Ericsson.
ST-Ericsson, 50-percent owned by Franco-Italian chipmaker STMicroelectronics
However, its new products have yet to gain traction and it has been hit by problems at Nokia, one of its biggest clients.
($1 = 6.857 Swedish Crowns)
(Reporting by Olof Swahnberg, Sven Nordenstam and Simon Johnson; Editing by David Hulmes)