Sony Corp., one of the world’s largest consumer electronics companies, and L.M. Ericsson Telephone Co., the world’s No. 3 cellular telephone handset maker, are in talks regarding collaboration in the handset business, Sony confirmed Thursday.

“Both companies are in talks about potential collaboration in the mobile phone handset business, but nothing specific has been decided,” said Sony in a statement.

The statement was issued in response to a report Thursday morning on Japanese public television network NHK that the two companies will announce a tie-up and a U.K.-based joint venture next week. The new company will cover aspects of the business from development to sales, the report said. The Nihon Keizai Shimbun reported in its Thursday evening edition that talks are in their final stages and will involve the spinoff of handset businesses from both companies.

Despite its high world ranking in the handset business, Ericsson has been struggling to stop a river of red ink. Commenting on full-year results released in January, Ericsson President and Chief Executive Officer Kurt Hellstr