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Toshiba and Fujitsu in final talks on JV

TOSHIBA Corp and Fujitsu Ltd are in final talks to combine their hard-disk drive businesses as the computer makers try to reduce costs, according to four people familiar with the discussions.

Toshiba, Japan's biggest chip maker, would have a majority stake in any joint venture, the people said. Fujitsu, a maker of chips, computers and software, is in talks with several firms about its hard-disk drive business, spokesman Etsuro Yamada said.

Fujitsu shares surged as much as 8.6 percent and Toshiba gained on speculation a partnership may help the Tokyo-based companies improve margins and gain ground on the biggest makers of hard-disk drives for personal computers, Bloomberg News said. The combined operations would have revenue of almost 700 billion yen (US$7.8 billion), more than that of the disk-drive business of Samsung Electronics Co, the world's fourth-largest manufacturer.

"The deal would be positive for both companies in that Fujitsu can jettison the money-losing unit and Toshiba can expand a potentially profitable business," said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co, which manages US$6.1 billion of assets.

A deal may be reached by the end of this month, the people said.

"It's true that we are in talks with Fujitsu on the matter, but nothing has been decided at the moment," Keisuke Ohmori, a spokesman at Toshiba in Tokyo, said by telephone.

Fujitsu rose 5.3 percent to close at 415 yen on the Tokyo Stock Exchange, its biggest increase since January 7. Toshiba rose 6 percent to 408 yen, against a 0.3 percent gain by the key Nikkei 225 Stock Average.

Fujitsu will cut its operating profit forecast for the year, two people familiar with the matter said.



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