Turmoil at Fujitsu-Siemens

MUNICH (03/30/2000) - Winfried Hoffmann and Robert Hoog have resigned as co-presidents of Fujitsu Siemens Computers BV (FSC), with board member and Executive Vice Chairman Tetsuo Urano becoming interim chief executive officer (CEO) of the company.

The official word from FSC is that Hoffmann and Hoog stepping down from their duties will strengthen the companies' efforts to find a cohesive management team for the future, especially since the company will take on new responsibilities beginning with the new fiscal year on April 1. FSC Chief Financial Officer Adrian von Hammerstein, who is a member of the Executive Board, told Computerwoche that Hoffmann and Hoog had been granted a leave of absence, but did not elaborate further.

A "new management style" is necessary for the company's strategy toward becoming the number one computer seller, the company said in a statement.

This formulation is thought to veil some well-known problems within FSC.

According to sources inside the company, Hoog announced to staff in February that the Siemens-Fujitsu venture had racked up losses of more than 40 million euros (US$38.5 million) in the four months since the merger in October 1999.

One month later, the figure had grown to between 60 and 70 million euros, the sources say.

Von Hammerstein said he would not comment on results from the previous fiscal year. However, he did say that given FSC's current market share, the company has "a success story to tell."

Company representatives pointed out that in the first six months after the merger, the new company grew faster than the market, and that integration progressed faster than predicted. The growth of the new company also allowed for broad expansion of FSC's customer base and formation of industry partnerships, they said.

The joint leadership of Fujitsu Europe and the Computer Systems Division, which falls under Siemens' Information & Communications Products (ICP) division led by Rudi Lamprecht, may not have been as harmonious as claimed in previous company statements. The company's own team overseeing the integration process planned to go over the heads of their colleagues, according to inside sources.

Employees within Siemens and Fujitsu are now speaking more of a hostile takeover rather than a friendly cooperation.

The animosity between the Siemens and Fujitsu top brass was said to have escalated at this year's CeBit exhibition, at which the leaders of Siemens were not allowed to set foot on the "holy third floor" of the FSC corporate headquarters building. This is where the Fujitsu managers reportedly conducted their important business.

Also, the conditions of the merger itself seem to have evoked displeasure with Siemens executives. Only Fujitsu-Siemens has the right to make key decisions regarding industry strategies in Europe. This is not the case in Asia, where FSC must obtain approval from parent Fujitsu Ltd. about where and to whom to sell its goods. Ironically, this could create a situation in which FSC would be allowed to sell machines to an international client within Europe -- but if this same client was also based in Singapore, FSC would have to await approval from the corporate office in Tokyo. An insider close to the company tells Computerwoche that Siemens is uncomfortable with these strict provisions and feels "taken advantage of."