Fujitsu-Siemens chief: Europe not a worry

The European computer powerhouse isn't being hit by the economic difficulties troubling competitor Hewlett-Packard, Chief Executive Paul Stodden says.

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Stephen Shankland
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HANOVER, Germany--European computer powerhouse Fujitsu-Siemens isn't being hit by the economic difficulties troubling competitor Hewlett-Packard, Chief Executive Paul Stodden said Thursday.

"We have not seen a downturn in Europe," Stodden said at a news conference at the CeBit trade show here. His positive view stands in stark contrast to HP CEO Carly Fiorina's warning Wednesday that the North American slowdown in computer spending is spreading to Europe.

The reason for the differing views is that U.S. customers already have invested heavily in computing infrastructure such as servers and desktop computers, he said. "There is still room to move in Europe," Stodden said, adding that the economic linkage between North America and Europe means there still is cause for some concern.

The news is an important data point in how badly U.S. problems are spilling over to the rest of the world--and consequently how rocky the road will be for companies such as chipmaker and bellwether Intel, which last year noted slowing demand in Europe.

Fujitsu-Siemens has seen some signs of concern, such as a slowdown in the current quarter in home desktop sales, but the company expects that market to be strong overall in 2001. Still, the consumer laptop market, as well as the corporate laptop market, is expected to have "high growth in 2001," Stodden said.

Stodden is at the helm of a company that has had some tough times since it was founded in October 1999 by its two parent companies, Japan's Fujitsu and Germany's Siemens, which each hold a 50 percent stake in the company. By July 2000, the new company had undergone major layoffs and was still struggling to create a new culture, he said, referring to the time as the company's "valley of tears."

With the cultural issues and the year 2000 spending slowdown, "that was probably the lowest point in the history of Fujitsu-Siemens," Stodden said. "For 2001, we expect the business to pick up."

The company had about $5.3 billion in revenue (6 billion euros) for both fiscal 2000 and 2001--the latter coming to a close at the end of March. The revenue trend is now upward, with the company expecting about $5.9 billion for fiscal 2002.

"We plan and expect to be profitable in the coming fiscal year," said Chief Financial Officer Adrian Hammerstein, adding that the profit margin is expected to increase faster than the 10 percent growth in revenue.

Fujitsu-Siemens is working on a new strategy that emphasizes mobile technology such as laptops and big-business "enterprise" hardware such as servers, Stodden said.

Enterprise equipment revenue, which currently accounts for just under a quarter of the company's overall revenue, is expected to grow 29 percent in the next fiscal year, Stodden said. Notebooks are expected to grow 43 percent.

In a new development announced at CeBit on Thursday, Fujitsu-Siemens said it will sell a Siemens Pocket PC handheld that can communicate with the GSM cell phone standard. While Siemens will sell the device in retail stores, Fujitsu-Siemens will sell it to corporate buyers, said Peter Esser, director of the company's volume products business.

The new product is a Casio Cassiopeia built with a Siemens label, Esser said.