Fujitsu eyeing PC merger with China’s Lenovo

Shares in Japanese IT giant Fujitsu soared on news it is considering merging its struggling personal computer division with China’s Lenovo, the world’s biggest PC maker.
A deal would mark the latest move by a Japanese firm to hive off struggling divisions to repair their finances, with Toshiba and Sony among a string of companies that have sold off assets in recent years.
Japanese personal computer makers have been scaling back their businesses as consumers move to mobile devices to check e-mail or use the web.
The leading Nikkei business daily said the merger was among a number of options Fujitsu was considering for the money-losing unit. It did not give financial details.
In response, the conglomerate confirmed it is looking at “various possibilities including the reported move” but did not elaborate.
The firm’s Tokyo-listed stock surged nearly six percent to close at 568.7 yen Thursday.
Fujitsu has been struggling to find a partner for its PC unit. It had been in talks with Toshiba and Vaio to merge their once high-flying personal computer businesses, but the talks have yet to result in a deal.
The reports on Thursday from the Nikkei and other Japanese media said Fujitsu and Lenovo were aiming to reach a deal by the end of this month as Fujitsu looks to focus more on its IT services business.
Possible options include transferring its PC design, development and manufacturing operations to a Lenovo-led joint venture, the Nikkei said.
Another option could see Lenovo taking a majority stake in Fujitsu’s PC subsidiary, it said, adding that either move could see about 2,000 Fujitsu employees move over to the Chinese company.
Lenovo already has a PC joint venture with Japan’s NEC.
Hiroshi Sakai, a chief analyst at SMBC Friend Research Center, warned Fujitsu may be running out of time to find a buyer for its PC unit in a shrinking market.
Still, he added that its focus on corporate clients and its facilities in Japan could be attractive for a potential suitor.
“Fujitsu’s PC division still has strong footing and holds reasonable domestic share so it’s attractive for a future business partner,” he said.
Once mighty Japanese firms have been selling off assets in recent years as they struggle to reorganize in the face of stiff competition from lower-cost rivals overseas, including in China and South Korea.
Earlier this year, Sharp agreed to a buyout that would see it taken over by Taiwan’s Hon Hai, better known as Foxconn, after the Japanese industrial mainstay was pummelled by huge losses and mounting debts.
China’s Midea Group has bought a little more than 80 percent of loss-making Toshiba’s home appliances arm, while Sony has unloaded a string of assets to claw back to profitability, including its laptop unit and a Manhattan office building.

Source: Arab News