Fujitsu buys Siemens' stake in FSC

Sale driven by need to reduce costs and refocus activity

Fujitsu wants to drive cost efficiencies but may compromise business performance

Technology giant Fujitsu is to buy the 50 per cent stake held by Siemens in the Fujitsu Siemens Computers (FSC) joint venture for €450m (£364m) in the latest chapter of consolidation in the IT sector.

FSC supplies PCs, servers and other IT hardware in Europe. The move was prompted by a need to reduce expenses at both firms since operating profit at the jointly-owned company represented only 1.6 per cent of total revenue in the past financial year.

Another driver behind the sale is Siemens' intention to use the spare cash to concentrate on projects aimed at the energy, industry and healthcare sectors.

Widespread opinion in the industry is that Fujitsu will retain FSC's server division, while the PC and laptop business is likely to be offloaded, Lenovo being one prospective buyer.

However, keeping FSC as a separate entity from the group may prevent Fujitsu from driving post-acquisition growth, according to Lionel Lamy, research director at IDC.

"It is bewildering to say the least. We believe this is a mistake, compounded by the fact that Fujitsu's experience in keeping an arm's length relationship with an autonomous division did not work well as far as ICL was concerned in the late 1990s," he said.

The acquisition could have put a stop to the competition between FSC and both its parent companies, according to Lamy, but Fujitsu and FSC are instead likely to compete with each other for business.

"Cannibalisation could have been avoided by integrating the two service entities. This is now going to be made worse," the analyst said.

"And the acquisition of FSC does nothing to position Fujitsu higher up the value chain in terms of innovation, or in high growth services segments such as security services, network convergence and transformational outsourcing."