Siemens and Fujitsu have finally signed a long expected agreement to merge their European computer operations and to share products and research across the parent companies.
The agreement, currently only a memorandum of understanding, creates a 50:50 joint venture which the companies claimed would be the world's fifth largest, and the biggest non-US, computer business. Assuming there are no objections, the joint venture will begin operating on 1 October, with the promise of no job cuts.
Heinrich Pierer, chief executive of Siemens, said in a statement: 'The venture between Siemens and Fujitsu is a further important step in the implementation of our 10-point programme to achieve sustainable growth in profitability.
'Following the merger of our information and communications units and the expansion of our internet activities, we are strengthening our competitive position in the strategically important field of computer systems,' he added.
The venture, to be known as Fujitsu Siemens Computers, will combine the PC, server and mainframe businesses of both companies. The organisation will sell under a single brand across Europe.
Combined, Fujitsu and Siemens have an annual revenue of about £4 billion and 9,600 staff. According to Siemens, they also occupy the top three slot in the European computer market. In a joint statement, the firms said they expected the joint venture to have revenue of more than £5 billion for fiscal 2000, ending 31 March, 2001.
Peter Lemon, analyst at IDC, said Fujitsu and Siemens were a good fit together, but the deal was yet another example of the pressure of falling margins on vendors, forcing them to consolidate.
'This is one answer to the problem of falling margins. There is some extremely cutthroat pricing at the moment. Fujitsu has a streamlined manufacturing base and has done well in the consumer sales, but has had problems with sales in the past,' he added.
Alan Norman, marketing director at Siemens Computer Systems, insisted that the deal was not intended to affect any existing deals between the parent companies and third parties.
He noted that the two companies had been working together for more than 20 years and that Siemens currently OEMs its high end mainframes from Fujitsu.
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