Lenovo Reportedly in Talks to Buy Fujitsu's PC Business

The world's top PC vendor may buy a majority stake in Fujitsu's struggling unit in a deal that would expand its market share, according to reports.

Lenovo PCs

Lenovo reportedly may buy Fujitsu's PC business, a move that would further expand Lenovo's lead position in the struggling global PC market while enabling Fujitsu to get the money-losing unit off its books.

Fujitsu officials, in a statement to The Wall Street Journal, said they "are considering various options for the PC unit, including a possible deal with Lenovo." Lenovo has declined to comment on the reports, which included the daily Nikkei in Japan citing an unnamed source saying officials with the two companies are in talks with the hope of reaching a deal this month.

The deal would move about 2,000 Fujitsu employees over to Lenovo, the Nikkei reported.

The global PC market has continued to contract over the past several years as consumers and business users have spent more of their money on such devices as tablets and smartphones. Analysts with IDC and Gartner in July reported that in the second quarter, the decline continued, with worldwide shipments falling 4.5 percent to 5.2 percent year-over-year. However, there is optimism that the market could see a rebound in the coming quarters as tablet sales fall and smartphone sales slow as that space matures. In addition, new PC form factors—such as two-in-ones—powered by the latest Intel chips and running Microsoft's Windows 10 operating system may convince users to buy new systems.

That said, the years-long decline of the PC market has taken its toll on system and component makers, which have answered the problem by trying to expand their efforts in other areas, including the data center, mobile devices and the internet of things (IoT). Lenovo two years ago spent about $5 billion to buy IBM's x86 server business and the Motorola Mobility handset unit from Google.

Lenovo, the world's top PC vendor with 21.1 percent of the market, according to IDC, would expand its presence in the Japanese market by buying Fujitsu's unit and take a competitor, even a struggling one, off the board. Lenovo already has a presence in Japan. The company in July announced it was buying most of NEC's stake in a joint PC venture the two companies created five years ago to grab more of the Japanese market. Lenovo officials said they were spending $195 million to buy 44 percent of NEC's share of Lenovo NEC Holdings, which will give the Chinese company 95 percent of the joint venture.

For its part, Fujitsu for several years has been trying to figure out what to do with its struggling PC business. The company in February spun out the PC and smartphone units into separate businesses, with the new PC business being called Fujitsu Client Computing. At about the same time, reports began surfacing that Fujitsu, Toshiba and Viao—which was created when Sony spun out its PC business—were negotiating to create a joint venture that would merge all their PC businesses into a single company that would be better able to compete with the likes of Lenovo, Acer and Asus. However, those talks reportedly fell through several months later.

An unnamed source told The Wall Street Journal that a deal between Lenovo and Fujitsu could result in a situation similar to Lenovo's partnership with NEC, in which Lenovo would buy the bulk of the Fujitsu PC subsidiary while Fujitsu kept a minority stake. According to Reuters, the Nikkei reported that another option would have Fujitsu moving its design, development and manufacturing operations to a joint venture led by Lenovo.

Roger Kay, principal analyst with Endpoint Technologies Associates, said he didn't see the reason behind Lenovo buying Fujitsu's PC business. There's not much Lenovo can gain through such an acquisition, and the company has enough work to do to continue integrating IBM's server business and Motorola into its operations, Kay told eWEEK.

In addition, in the PC business, most of the real innovation lies with Intel and Microsoft. There's not a lot to differentiate one system from another.

"I have never been a big fan of PC companies buying other PC companies," he said, noting that a deal would not upgrade Lenovo's capabilities in the space. "They're not getting much in the way of new technologies. … On the engineering side, Lenovo has everything Fujitsu has, maybe more."

Much will depend on what price Lenovo would end up paying for the Fujitsu PC business. No possible financial details have been reported.

"If it's a fire sale and Fujitsu just wanted to get out of the business, then maybe it's a good price," Kay said.