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Toshiba, Fujitsu, Vaio mulling PC business merger

The combined company would have the largest domestic market share.

TOKYO -- Toshiba, Fujitsu and Sony spinoff Vaio are considering integrating their personal computer operations, a move that would create a top player controlling just over 30% of the Japanese market.  

     The three will soon begin negotiating the specifics, aiming to hatch a basic agreement as early as this month and launch the combined company in April 2016. The merged company would surpass the currently top-ranked NEC Lenovo Japan Group, which has a 26.3% share of the market.

     Vaio, which was spun off from Sony in July 2014, would likely be the surviving company, with the other two making investments and transferring their operations to the combined entity. Staff would also likely be carried over. The leading plan is to thoroughly integrate domestic and overseas operations, from research and development to production and sales.

     Toshiba, Fujitsu and Investment fund Japan Industrial Partners, Vaio's top shareholder, are likely to invest around 30% each in the new company.

Time for a change

Toshiba created and popularized the world's first notebook computer. Its Dynabook line remains the core of its operations. Fujitsu boasts its consumer-oriented FMV line of PCs, as well as an array of tablets.

     Toshiba's strength is in the North American market, fueled by a production subsidiary in Hangzhou, China and overseas sales affiliates. Fujitsu claims Europe as its stronghold, with production companies in Germany and elsewhere, in addition to Japan's Shimane Prefecture. Vaio, initially a Sony brand, enjoys strong name recognition.

     Around 308 million PCs were shipped globally in 2014, says U.S. research firm IDC. China's Lenovo Group and U.S. makers HP and Dell accounted for roughly half that number. Fujitsu, Toshiba and Vaio's combined share was around 6%, coming in just behind sixth-place global player Apple.

     Sales from Toshiba's PC operations hit 666.3 billion yen ($5.36 billion) for the year ended March. But the division continues to incur operating losses, alongside the company's major appliance business and other sectors. Profit from the PC business had been padded a total of 57.8 billion yen through accounting fraud from fiscal 2008 through April-December 2014, forcing Toshiba to consider a drastic restructuring, including the possibility of a sell-off.

     Fujitsu had already announced in late October that it would split off its PC operations in spring of 2016. Computer shipments are seen on the scale of only 4.2 million units for fiscal 2015, down from 4.7 million units a year earlier. The two companies aim by combining PC operations with Vaio to cut indirect costs and strengthen their positions when negotiating with suppliers. But the plan could still be scrapped if they conclude that an integration will yield meager benefits.


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