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Sat, Jan 14, 2006 - Page 12 News List

Fujitsu's stock climbs on hard disk drive optimism

AP , TOKYO

Fujitsu's stock jumped more than 5 percent yesterday on news that the struggling company plans to expand its hard disk drive business and that the Tokyo Stock Exchange -- which uses Fujitsu software -- plans to boost trading capacity.

Fujitsu Ltd is the main supplier for the exchange's computer trading system, which has been plagued by trading problems in recent months due to increased trading volume in view of Japan's economic recovery.

The company also said it will enter the growing business of 1.8 inch hard disk drives, used for storing digital data in portable music players, video cameras and portable computers.

The product will be developed by Fujitsu in a partnership with US maker Cornice Inc, based in Longmont, Colorado, Fujitsu official Ichiro Komura told reporters.

The Japanese electronics maker, now ranked fifth among the world's hard drive makers, hopes to be one of the top three by fiscal 2008, doubling its annual shipment to 54 million from today's 26 million and controlling about 30 percent of the global market, he said.

Fujitsu plans to introduce a 120 gigabyte 1.8 inch model in the first half of the fiscal year ending March 2008.

The two pieces of good news, which lifted Fujitsu shares 5.1 percent to close at ?1,058 (US$9.3), are a welcome respite for the company.

Like other Japanese electronics makers, Fujitsu sank into the red in recent years as prices on digital parts plunged and cheaper Asian rivals grabbed bigger market share. It stopped making 3.5 inch hard disk drives for desktop computers in 2001 and abandoned the plasma display panel business last year.

And the company's software was blamed for an embarrassing suspension in trading on the Tokyo Stock Exchange on Nov. 1. Trading was stopped for all but the last 90 minutes due to a glitch in the transactions system, blamed on new Fujitsu software to deal with recent surges in volume.

As punishment, Fujitsu's board later cut president Hiroaki Kurokawa's salary by half for six months and imposed pay cuts of 10 to 25 percent on other executives.

In expanding its hard drive operations, Fujitsu is banking on the growing popularity of music players like the Apple Computer Inc's iPod as well as other gadgets such as video game machines that require larger data storage capacity in smaller sizes in deciding to enter the 1.8 inch hard disk drive market, Komura said at Tokyo headquarters.

In recent years, Fujitsu has been focusing on hard drives for portable computers, a sector it expects to continue to expand and where it trails Japanese rival Hitachi in global shipment share, and those for servers for corporate clients, where it follows Seagate Technology of the US.

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