Chinese company Lenovo is eyeing a merger with Fujitsu for personal computer business in a bid to not only expand its reach in the segment but also save a sizeable chunk of its revenue that is currently being drained by operational expenses including staff salaries.
According to a person aware with the merger talks, the two companies have reached a stage wherein they are currently negotiating over prices and terms and if things go well the two companies will strike a deal by the end of this month. The report first emerged in Nikkei newspaper, which reported the deal earlier Thursday.
Lenovo will be keeping an upper hand in the deal with a larger stake, the source added. If we go by the current market share of the two companies in the personal computers segment, Lenovo currently leads with a whopping 19.4 per cent market share whereas Fujitsu only has a 2.1 per cent share. The deal will not only allow Lenovo to offload its personal computing business to Fujitsu to a certain extent, it will embark upon a cost saving strategy by culling as many as 3,200 jobs to save as much as $1.35 billion annually.
Beyond the intention of expanding its PC business, Lenovo is also eyeing to expand its smartphone business. The company has a great presence in quite a few countries including India and with its strategy of launching mid-range smartphones, the Chinese company has been doing pretty well in this segment.
On the other hand Fujitsu will garner a greater exposure through Lenovo at a time when Japanese PC makers are downsizing their businesses owing to increase proliferation of mobile devices in Japan as well as across the globe. Fujitsu has been looking for partners to sustain is business and according to reports earlier this year, the Japanese company held talks with Vaio and Toshiba, but nothing has been materialised yet.
The Nikkei reported that the Lenovo-Fujitsu business may merge in the future with Lenovo’s PC venture with NEC Corp., which was formed in 2011. Fujitsu would move its PC planning, development, manufacturing divisions to Lenovo as part of the deal, the Nikkei said, with about 2,000 Fujitsu workers likely to be relocated to Lenovo.