Fujistu in European venture

SIEMENS AND Fujitsu of Japan yesterday merged their European computer operations to create the fifth biggest computer manufacturing company in the world.

The new group, to be known as Fujitsu Siemens Computers, will have projected sales of 7.6bn euros (pounds 5bn) next year and a workforce of 9,600. It will rank behind Compaq, Dell, IBM and Hewlett-Packard in overall sales but in mainframe computers it will be second after IBM.

The merger is likely to result in rationalisation of manufacturing capacity on the Continent. Siemens has two computer manufacturing plants in Germany while Fujitsu also owns a low-cost computer assembler in Germany.

The two businesses employ 400 people in the UK, all of whom work in sales. Neither company has computer manufacturing operations here.

Although Siemens is the bigger of the two businesses in Europe, with sales of 4bn euros against 2bn euros for Fujitsu, each company will hold a 50 per cent stake in the new venture.

Analysts have speculated that the merger may be a way for Siemens to exit the computer business by effectively sub-contracting production to Fujitsu.

The new company said it aimed to lift its world ranking to number three which would suggest annual production of more than 4 million computers.

The joint venture marks a further stage in the 10-point plan devised by Heinrich Pierer, Siemens chief executive, to overhaul the group following a collapse in profits last year.