Another Lenovo setback? Fujitsu to buy Siemen's stake in PC maker, sources say
Posted November 3, 2008
MUNICH, Germany — Industrial conglomerate Siemens AG is poised to sell its 50 percent stake in the joint venture Fujitsu Siemens Computers to Japan's Fujitsu Group, two people familiar with the deal told The Associated Press on Monday.
If true, the deal would be a blow to Morrisville, N.C.-based Lenovo. The world's fourth-largest PC maker had reportedly been considering a deal for the Fujitsu Siemens joint venture in a move to bolster its global sales, marketing and distribution reach.
Lenovo earlier this year failed in efforts to acquire U.S.-based Gateway Computer, which went to Taiwan-based Acer. That deal and a related buy of Packard Bell in Euorpe – which Lenovo also had targeted – lifted Acer past Lenovo into the No. 3 PC-maker slot. HP is No. 1, followed by Dell.
Siemens has been contemplating a sale of its half in the joint venture at least since August. Chief Executive Peter Loescher said then that the company was in talks with Fujitsu about the fate of the unit, which makes personal computers and laptops and posted sales of 6.6 billion euros but a pretax profit of just 105 million euros last year.
While no price for the stake has been disclosed, German media have valued it at about 500 million euros ($640 million).
The Associated Press spoke to two people involved in the talks who could not be identified because they were not authorized to speak to the media about the negotiations. They said an announcement of the deal could come within days, but declined to provide more specific details.
Siemens did not comment. A call seeking comment from Fujitsu was not immediately returned.
Last week, Fujitsu said its profits dropped 21 percent to 4.29 billion yen ($44.2 million) in the most recent quarter as sluggish sales of personal computers and other gadgets offset growth in technology services.
The Tokyo-based company lowered its profit projection for the fiscal year, blaming an expected fall in consumer electronics purchases as the global economy slows. Like other Japanese exporters, Fujitsu's earnings have been hurt by the rising yen.
Siemens reports its third-quarter earnings later this month.
The venture employs more than 10,000 workers worldwide, among them 6,200 in Germany with plants in Augsburg, Munich, Paderborn and Soemmerda.
Dieter Scheitor, a representative for the union IG Metall on Siemen's supervisory board said that in the event of a change of owners, the union would insist that the 2,000 jobs in Augsburg and 500 jobs in Soemmerda be kept.
Shares of Siemens were up 3 percent at 47.84 euros ($61.24) in Frankfurt trading.