Fujitsu Buys Siemens' Stake in Venture

The Japanese electronics company is using the move to expand its presence in Europe.
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Japanese electronics giant

Fujitsu

is buying out

Siemens AG's

(SI) - Get Report

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) - Get Report

and

Hewlett Packard

(HPQ) - Get Report

. 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.

The increase in revenue was driven by strong demand from emerging markets in Central and Eastern Europe, the Middle East, and Africa, which grew 17% year-over-year. The worldwide server market grew just 6.4% in the same period, IDC said.

There have also been media reports that Fujitsu might narrow its focus even further by pulling the plug on Fujitsu Siemens' consumer PC business, although the Japanese firm has not yet made a decision on this, according to

Reuters

.

Fujitsu is also reportedly moving its server-related R&D to Fujitsu Siemens' facilities in Germany.

The Fujitsu-Siemens joint venture will formally end on April 1 2009 when the deal closes, subject to regulatory approval.

In its statement, Fujitsu confirmed that Bernd Bischoff, the CEO of Fujitsu Siemens Computers, resigned "for personal reasons" during the course of the buyout negotiations. Bischoff has been replaced by Kai Flore, who was formerly the Fujitsu Siemens CFO.