Fujitsu Says It Is in PC Merger Talks With Lenovo

Fujitsu Says It Is in PC Merger Talks With LenovoJapan’s Fujitsu said on Thursday it was in talks to merge its struggling PC business with Chinese computer giant Lenovo, sending its shares soaring as the company also announced a recovery in profits.

The talks come as Japanese personal computer makers work to scale back their businesses as consumers shift to smartphones and tablets.

Tokyo-based Fujitsu said it and Lenovo, the world’s largest PC maker, are “exploring a strategic cooperation in the realm of research, development, design and manufacturing of personal computers for the global market”.

The two firms, which are yet to reach an agreement, are also talking with government-backed Development Bank of Japan for financial and strategic support.

Fujitsu shares rose by 7.8 percent on news of the merger negotiations to close at JPY 599.3.

In a separate announcement, the company said its net profit for the six months to September came to JPY 11.8 billion ($113 million or roughly Rs. 755 crores).

The recovery marks a reversal from a net loss of JPY 15.9 billion during the same period last year, thanks to cost-cutting efforts particularly in the PC and mobile phone operations.Operating profit stood at JPY 25.9 billion, up from an operating loss of JPY 12.4 billion the year before, while sales fell 7.0 percent to JPY 2.08 trillion (roughly Rs. 1,32,869 crores).

Fujitsu also slightly revised down its annual sales forecast to JPY 4.5 trillion, JPY 100 billion lower than an earlier forecast due to revised exchange rate assumptions, but kept annual net profit projection at 85 billion yen.

Tags: Fujitsu, Lenovo, PC Merger, PC, Laptops
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Lenovo, Fujitsu Said to Discuss Merger of PC Businesses

Lenovo, Fujitsu Said to Discuss Merger of PC BusinessesLenovo, Fujitsu Said to Discuss Merger of PC Businesses
HIGHLIGHTS
The companies are aiming to reach agreement this month: Nikkei
Lenovo is also seeking to make further inroads into smartphones
Fujitsu would move its PC planning, development, manufacturing divisions
Lenovo Group Ltd. is in talks with Fujitsu Ltd. to merge their personal-computer businesses, with the Chinese manufacturer taking a majority stake in the venture, a person with knowledge of the matter said.

The two sides are still discussing pricing and terms, said the person, who asked not to be identified because the talks are private. The companies are aiming to reach agreement this month, according to the Nikkei newspaper, which reported the deal earlier Thursday.

An alliance with Fujitsu would give Lenovo, the world’s biggest PC maker, a bigger foundation to expand its share. Lenovo had 19.4 percent of the global PC market in 2015, compared with 2.1 percent for Fujitsu, according to IDC. Lenovo is also seeking to make further inroads into smartphones, while embarking on a plan to cut $1.35 billion from annual costs and eliminate 3,200 jobs. The company said in August that it was making progress and would turn around its business next year.

Fujitsu shares rose about 7 percent to JPY 575.7 as of 10:45am in Tokyo, after climbing as much as 8.6 percent. The stock had declined 11 percent this year through Wednesday. Lenovo’s shares climbed as much as 2.7 percent in Hong Kong, but remain down more than 30 percent in 2016.
Japan’s PC makers have been scaling back their operations or exiting the business entirely, as more people use mobile devices to check e-mail, manage their finances and access the web. Fujitsu had been struggling to find a partner, and talks with Vaio and Toshiba Corp. were on the verge of collapse, the Wall Street Journal reported in April.

The Nikkei reported that the Lenovo-Fujitsu business may merge in the future with Lenovo’s PC venture with NEC Corp., which was formed in 2011. Fujitsu would move its PC planning, development, manufacturing divisions to Lenovo as part of the deal, the Nikkei said, with about 2,000 Fujitsu workers likely to be relocated to Lenovo.

Tags: Fujitsu, Fujitsu PCs and Laptops, PC, Laptops, Lenovo

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