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Fujitsu eyes more M&A to boost software operations

Japan's Fujitsu Ltd said it would consider more acquisitions to improve its software line-up as part of its plans to beef up its overseas business and better compete with rivals like IBM and Hewlett-Packard.

Competition in the global IT sector is growing fiercer, with the industry going through a wave of shake-ups, including Oracle's purchase of Sun Microsystems and Cisco Systems' entry into the server market.

Richard Christou, head of Fujitsu's global operations, said the company needs to boost its software and solution businesses outside of Japan, and it may do so through acquisitions, alliances with third parties, or by building them up on its own.

“I do think there are a lot of companies that made a success of buying up smaller software houses with a particular solution, and I think that's perfectly possible,” he told reporters.

Fujitsu, Japan's biggest computer server vendor and No. 2 PC maker, is desperate to boost its global presence in IT as there are few growth prospects in the domestic market and the global economic slump has battered its chip and electronics operations.

It bought out a computer venture with Siemens in April, and it has also acquired Telstra Corp's IT services unit Kaz Group and consulting firm Supply Chain Consulting, both in Australia.

Fujitsu is betting on its core technology solution division, which includes servers and services, for growth, while it sheds its hard-disk drive and other troubled operations. The division generated 66% of its group sales last financial year.

Aiming to generate 40% of its sales abroad, Fujitsu will beef up its marketing to increase its brand recognition overseas and grab more large companies as clients, Christou said.

Fujitsu generated 32% of its sales abroad in the year ended March.

He added that the company may need to restructure its overseas operations to cut excess costs but was unlikely to carry out major job cuts, so that it would not lose its competitiveness once the economy recovers.

Fujitsu Siemens cut about 700 jobs in Germany before Fujitsu bought Siemens' 50% in the venture.

“I don't think the solution to what's going on in the world today is to cut huge swathes out of your workforce because the upturn could come more quickly particularly in the IT business than perhaps people think,” he said.

“When it does, if you don't have resources to respond to it, you lose the benefit.” (Reuters)