Ericsson (Nasdaq: ERICY) announced today it would end its joint venture with Sony(NYSE: SNE) if mobile-handset sales don't increase over the next two or three quarters. If this happens, it will signal the ignoble end to the participation of one of the three formerly dominant handset makers.

Ericsson's tormentors are legion. The difference between Ericsson's experience in this market and George Custer's in his last stand at Little Bighorn is that Ericsson knows in advance who its tormentors are and recognizes its position is dire. Starring as Sitting Bull is Nokia(NYSE: NOK), the dominant handset maker, with more than 35% of the market. And also starring, as Crazy Horse, Samsung, which has come on the scene to rapidly gain market share, particularly at the lower end. According to Gartner Group, Ericsson's share of the market is just over 5%.

Ericsson and Sony announced this partnership last October. Even then, it was a poorly kept secret that both were seeking to bolster their respective money-losing handset divisions with some good ol' economy of scale. At the time, the companies projected the joint venture would achieve profitability by its first year of existence. This hasn't happened, and rapidly dwindling sales threaten any possibility of it happening anytime soon.

Less than two years ago, it seemed to many that Ericsson's price at below $20 per share was unbelievably cheap. As of this afternoon, it was $0.75. While none of the handset manufacturers has had a good go, from a share-price perspective, they haven't endured these kinds of shattering declines, either. Ericsson's evaporation shows what can happen to a company with a declining position in a maturing market. It's the mobile-phone version of former PC giant AST. And for all intents and purposes, it's setting itself up to evacuate from a position that's no longer tenable.

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