Fujitsu Buys Siemens' Stake in Venture

Japanese electronics giant Fujitsu is buying out Siemens AG's (SI) stake in their European joint venture for $580 million in an attempt to boost its overseas business.

The news sent Fujitsu's shares up 6.63% in trading in Tokyo. Siemens shares were also up, rising $2.82, or 4.7%, to $62.83 in early trading in New York.

Fujitsu will pay 450 million euros for Seimens' stake in Fujitsu Siemens Computers, the joint venture, in which both companies held a 50% stake.

Kuniaki Nozoe, Fujitsu's president, said the company's "global growth strategy" was behind the decision. "We're inheriting a strong customer base in EMEA (Europe, Middle East, Africa)."

Based in Maarssen, Holland, Fujitsu Siemens Computers was set up in 1999 to sell servers, PCs, and storage technologies.

Fujitsu and Siemens, though, are now headed in different directions. Fujitsu wants to ramp up its efforts in the European server market, which is dominated by IBM (IBM) and Hewlett Packard (HPQ). Siemens is focusing on the healthcare and energy sectors.

Slowing sales of PCs, hard disk drives, and electronic components prompted Fujitsu to lower its 2008 profit forecast last week and underscored the company's desire to expand other parts of its business.

Servers and services are at the forefront of this effort. Fujitsu recently unveiled a new line of servers containing high-speed chips from Sun Microsystems (JAVA) to tap into enterprise demand for high-performance systems.

Despite the current IT spending slowdown, Europe remains a highly lucrative region for server sales. Compared to the prior year, server revenue in Europe, Middle East and Africa grew 8.7% in the second quarter, according to IDC, a technology research firm.