NEC, HP expand computer system bond

TOKYO: Japanese electronics conglomerate NEC Corp said on Wednesday it was

expanding cooperation with Hewlett-Packard Co in so-called mission-critical

computer systems, such as banking systems, that cannot afford to fail.

The two computer makers, which have already cooperated on such systems in

Japan, will work together on marketing and delivering them globally, they said

in a statement.

The alliance comes as both companies are looking to bolster their computer

services operations, which offer relatively stable profit margins in the

volatile information technology sector. They will initially set up a joint

project targeting systems for US financial institutions and Japan-based

multinational firms.

NEC, also Japan's second-largest chipmaker and a major manufacturer of

telecommunications equipment, posted heavy losses in the business year to March

31 due largely to last year's severe IT slump. Japan's sprawling chip-making

conglomerates have responded to the downturn in part by sharpening their focus

on computer services and software, with NEC positioning mission-critical systems

as a centerpiece of its strategy.

Its push into computer services has included a slew of alliances with sector

heavyweights such as software giant Microsoft Corp. NEC has also touted its

success in integrating computer systems at Sumitomo Mitsui Banking Corp., the

product of a merger last year that created Japan's second-largest banking group,

at a time when other merged Japanese banking giants have faced system

nightmares.

HP also targeted computer services as a growth area while it proceeded with

its recent merger with Compaq Computer Corp.