Toshiba, Fujitsu 'in talks to merge loss-making PC units'

TOKYO • Toshiba and Fujitsu are in talks to split off and merge their personal computer units, people familiar with the matter said, as Japan's electronic conglomerates seek to retreat further from loss- making businesses.

The talks are at an early stage and it is unclear whether a deal will be reached, they said, declining to be identified as they were not authorised to speak about the matter.

The emergence of tablets and other devices, as well as fierce competition, has pushed Japanese PC divisions into the red.

At the same time, Toshiba is under pressure to restructure in the wake of a US$1.3 billion (S$1.8 billion) accounting scandal, while Fujitsu has seen PC profitability slip away as a weaker yen has inflated the cost of imported parts.

Combining PC operations would create a company with around 1.2 trillion yen (S$13.8 billion) in sales and give greater economies of scale that would help with procurement costs.

But analysts see prospects of a return to past days of thriving sales as slim, given that the two account for just 6 per cent of global PC sales.

"It is uncertain whether or not the new integrated company could recover international competitiveness," said Mr Takeshi Tanaka, senior analyst at Mizuho Securities.

A combination would come on the heels of Sony hiving off its PC business into unlisted Vaio last year. Some domestic media reported that Vaio would also be part of the new venture, but a spokesman for the company denied it was in talks with any firm about its PC operations.

Fujitsu said in a statement it is looking at options for its PC business after flagging plans this year to split it off. Toshiba said it is looking at various possibilities to improve its operations.

The Yomiuri newspaper said a deal with Fujitsu was uncertain as Toshiba was also looking at other options, including partnerships with overseas rivals. PCs account for roughly 10 per cent of revenue at both Toshiba and Fujitsu.

In a market dominated by Lenovo, HP and Dell, Toshiba had just 4.2 per cent of the global market last year, while Fujitsu had 1.7 per cent, according to research firm Gartner.

Splitting off weak operations into joint ventures has become common practice for Japanese electronics conglomerates.

Smartphone screenmaker Japan Display, for example, was formed in a government-backed deal in 2012 from the ailing display units of Sony, Toshiba and Hitachi.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 05, 2015, with the headline 'Toshiba, Fujitsu 'in talks to merge loss-making PC units''. Print Edition | Subscribe