Fujitsu in merger talks to sell off its PC business to Lenovo

Japanese firm Fujitsu is reportedly in talks to merge its struggling PC business with Chinese computer giant Lenovo. With the coming of smartphone technology and tablets, this Tokyo based company which was once a major player in the Personal Computing space has been working hard to scale back their business.

According to Fujitsu, Lenovo and it are “exploring a strategic cooperation in the realm of research, development, design and manufacturing of personal computers for the global market”. The two firms, which are yet to reach an agreement, are also talking with government-backed Development Bank of Japan for financial and strategic support.

The deal is very crucial from the Japanese computer manufacturer perspective as it should free up Fujitsu to pour more resources into its profitable IT services operations. In 2015, Fujitsu’s IT operations were recognized as the world’s fourth-largest IT services provider measured by revenue.

For Lenovo the merger would increase its footprint in Personal computer segment while also increasing its purchasing power. It would not be the first acquisition or collaboration of the sort for Lenovo, which bought the PC division of IBM in 2005 and went on to create a PC joint venture with NEC Corp in 2011.

Fujitsu president Tatsuya Tanaka told a press conference that his firm wants to improve the competitiveness of its PC business. “Our priority option is to team up with Lenovo Group which has global PC operations,” he said, according to public broadcaster NHK’s website.

Investors welcomed the news, as Fujitsu shares rose by 7.8 percent to close at 599.3 yen.

In a separate announcement, Fujitsu said its net profit for the six months to September came to 11.8 billion yen ($113 million). The recovery marks a reversal from a net loss of 15.9 billion yen during the same period last year, thanks to cost-cutting efforts particularly in the PC and mobile phone operations.

Operating profit stood at 25.9 billion yen, up from an operating loss of 12.4 billion yen the year before, while sales fell 7.0 percent to 2.08 trillion yen.