Fujitsu finds search for new head tough

TOKYO, JAPAN: Fujitsu Ltd, Japan's largest computer server vendor, is having a tough time finding a new company head, its president said, amid investor worries that leadership problems may stall the firm's restructuring push and dampen its appetite for acquisitions.

A committee to select the next Fujitsu president has met a few times but the search has been difficult, President and Chairman Michiyoshi Mazuka told Reuters in an interview on Thursday.

"We need to find someone strong enough to carry through with our mid-term reform programme," Mazuka said. "These targets cannot be met otherwise."

Mazuka took the helm at Fujitsu provisionally after former President Kuniaki Nozoe abruptly stepped down in September, citing illness.

Some investment bankers have said that with the question of Fujitsu's leadership still in limbo, the company could find it hard to withdraw from loss-making operations and pursue acquisitions to boost sales in IT services.

Fast decision-making is needed at a time when the IT services sector, dominated by bigger rivals IBM, Hewlett-Packard and Dell, has been hit by a wave of shake-ups, investors say.

Under Nozoe, Fujitsu had been desperate to join the M&A fray, which saw Oracle acquire Sun Microsystems, Hewlett-Packard's purchase EDS.

Wavering

Before his resignation, Nozoe had said that Fujitsu's mid-term targets include a doubling of its operating profit next year after restructuring its operations and expanding overseas, possibly through acquisitions.

But whereas Nozoe had said that target was fixed, Mazuka said that it depended on the economy.

"That target was based on a scenario of a recovery in the next business year," Mazuka said. "We have to see if that happens."

Mazuka also said that Fujitsu's ability to deliver on its annual operating profit outlook for 31 percent growth, above analysts' estimates, depended on the strength of IT services sales in January-March.

Its IT services sales in Japan in October and November have recovered to last year's levels, before the Lehman shock hit IT spending, but a full-scale recovery would not occur until September-March of the next business year, he said.

Semiconductors were weak and PCs were struggling, although interest in IT services investment has picked up, he said.

"We have to see if the recovery in other segments is strong enough to make up for the shortfall."

Shares in Fujitsu have gained 2.4 percent since this quarter began, underperforming a 4 percent rise in Tokyo's electrical machinery index's rise.