Fujitsu, Toshiba Play Down Merger Story

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By Gabriel Perna | June 12, 2010 11:46 AM EST

Fujitsu and Toshiba downplayed rumors of an impending merger, of their mobilephone businesses, thogh neither issued a full-fledged denial.

Beginning with the Nihon Keizai Shinbun newspaper, several news organizations, including the Wall Street Journal and Financial Times, quoted unnamed sources that said both the two Jaoanese electronics giants were negotiating to merge their handset operations.

Both companies immediately put up a notice on their web sites downplaying the possibility. Toshiba's statement said, "Toshiba is implementing various programs to reshape its mobile phone business. However, we have not made any decision relevant to media reports that appeared today, and there is nothing to announce at this moment." Fujitsu came out with a similar press release saying it has made no such decision on merging with Toshiba.

According to Japanese market research firm MM Research Institute Ltd., the potential merger would create the second largest mobile phone manufacturer in Japan at 18.7 percent of the handset market, behind only Sharp Electronics which leads with 26.1 percent share.  Panasonic's mobile phone company is currently second with 15.1 percent.   

Mergers between major Japanese handset makers have been commonplace in the last few years. Since 2007, the industry has seen 10 major players shrink to six. In September, NEC, Casio and Hitachi agreed to merge to become NEC Casio Mobile. Two years ago, Kyocera acquired Sanyo.

The consolidation is likely because Japanese phone makers have struggled to make an impact globally. According to Gartner research, the country's phones only represent three percent of the global market. Whereas Nokia and HTC have been able to export their phones successfully, most Japanese phone manufacturers have failed to generate any kind of interest outside the country.

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