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Fujitsu sells HDD business to Toshiba

by Scott Bicheno on 17 February 2009, 10:51

Tags: Toshiba (TYO:6502), Fujitsu (TYO:6702)

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Circling the wagons

Times are tough for most technology manufacturers, but they seem especially so for Japanese ones. In a long anticipated move, Fujitsu has announced it will sell its hard disk drive (HDD) business to Toshiba. Both companies have recently announced or forecasted significant losses.

The deal currently exists as a memorandum of understanding, but the companies aim to complete the transaction in the first quarter of fiscal 2009. Fujitsu will be moving all its HDD-related businesses into a new company, which will become a subsidiary of Toshiba, but which Fujitsu will retain a 20 percent stake in for "a certain period of time".

The move is expected to strengthen Toshiba's position in the notebook HDD market, give it entry into the enterprise HDD market and enable it to expand its solid state drive (SSD) offering.

The move coincides with Fujitsu revising the earnings projections it first announced at the end of last month. For the financial year ending 31 March 2009, Fujitsu had expected to make a loss of 20 billion yen, this has now been changed to a loss of 50 billion yen. The whole of that increase has been attributed to one-off losses related to the transfer of the HDD business.