Monday, November 3, 2008

Fujitsu Said To Be Close to Buying Siemens Venture

Original post: Bloomberg.

e8000_fcs Oct. 31 (Bloomberg) -- Fujitsu Ltd., Japan's largest software-service company, is close to agreeing to buy out Siemens AG's 50 percent stake in their computer-making venture to bolster its server operations, five people familiar with the talks said.

Fujitsu may pay about 50 billion yen ($515 million) to 60 billion yen, three of the people said, asking not to be identified because the discussions are confidential. An announcement will be made as early as next week, they said.

A purchase would give the Tokyo-based company full control of Fujitsu Siemens Computers Holding BV to expand computer- server sales in Europe as the Japanese market shrinks. For Munich-based Siemens, a sale would fit into Chief Executive Officer Peter Loescher's plans to focus the German company's operations on energy, industry and health-care services.

``From Siemens's point of view they should be very happy,'' said Michael Busse, an analyst at Landesbank Baden-Wuerttemberg in Mainz, Germany. ``In this environment they can be glad to get rid of it and get money for it.'' Busse, who advises clients to buy Siemens shares, estimates the stake is worth about 300 million euros ($382 million).

Created in 1999

Fujitsu Siemens, established by the two companies in 1999, earned 105 million euros in profit before taxes in the year ended March 31 on revenue of 6.61 billion euros, according to the Maarssen, Netherlands-basedcompany's Web site. The venture employed 10,500 people as of April.

After the acquisition, Tokyo-based Fujitsu plans to sell part of the venture's personal-computer division to focus on servers that run company networks, the people said.

``While we continue to take positive forward steps in our negotiations, no agreement has been reached yet,'' said Etsuro Yamada, a Tokyo-based spokesman at Fujitsu. Marc Langendorf, a spokesman at Siemens, declined to comment.

Fujitsu on Oct. 29 said operating profit at the technology solutions business, which includes telecommunications equipment, software services and servers, will gain 17 percent to 210 billion yen while revenue will drop 1 percent to 3.24 trillion yen in the year ending in March. The unit is projected to account for 64 percent of total revenue this fiscal year.

Fujitsu had a cash pile of 316.9 billion yen as of the end of September, according to the company's latest financial statements.

Server Sales

Sales of servers in Japan fell 6 percent to 636.4 billion yen in 2007, the fourth straight year of decline, according to Framingham, Massachusetts-based researcher IDC. Fujitsu had 20 percent of the market, followed byInternational Business Machines Corp. with 19 percent and Hewlett-Packard Co. with 18 percent, the research firm said.

In the second quarter, Fujitsu Siemens ranked fourth in sales of servers in Europe, the Middle East and Africa, behind Hewlett-Packard, Dell Inc. and IBM, according to estimates at IDC.

Siemens, Europe's largest engineering company, in July said it plans to cut 16,750 jobs to meet Loescher's goal of eliminating 1.2 billion euros in costs by 2010 as part of an effort to raise profitability to levels similar to General Electric Co. and ABB Ltd. The company this year consolidated its nine operating divisions into three units.

Global sales of servers will probably rise 3.7 percent this year to $56.4 billion, after climbing 3.6 percent last year, according to an Oct. 8 report byMerrill Lynch & Co. Growth will slow in 2009 to 1.9 percent, the report said.