Nokia Oyj

Nokia Oyj, the world's biggest cell- phone maker, and Sanyo Electric Co., the largest handset-battery producer, will form a venture to make mobile phones.

The companies plan to make handsets based on the CDMA2000 standard, the main format used in the U.S., targeting annual profit of $256 million within two years.

The venture will begin operations as early as July in Osaka and Tottori prefectures in western Japan and San Diego, California and is expecting to sell 35 million handsets in the first year.

The venture will also target sales in Brazil, Russia, India and China, where mobile-phone penetration is lower than in the U.S., Japan and other parts of Europe.

Nokia and Sanyo aim to raise their sales by bringing together Nokia's dominance in low- to mid-range phones and Sanyo's expertise in handsets with high-speed Internet access that can download music and video.

Nokia also plans to start selling a handset that lets customers make calls over the Web.

Nokia also expects to benefit from increased demand for more advanced phones, as markets in Europe and the U.S. near saturation and prices drop.

The venture may help Sanyo, which received a 300 billion yen bailout from banks, by improving the company's sales in the U.S. 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.