Fujitsu Ltd, Japan's biggest IT services provider, said on Friday it plans to boost investment in cloud computing by 54 percent this year to beef up its operations in one of the IT sector's hottest areas.

It will also seek more global partnerships and acquisitions to expand its software and product offerings accessed online, and key targets will include software firms with strong technologies or client bases, president Masami Yamamoto told a news conference.

Fujitsu, the world's No. 3 IT services vendor after IBM and Hewlett-Packard, plans to spend $1.1 billion on its cloud computing business by March 2011 and aims to grow sales from the operations to 1.3-1.5 trillion yen by 2015/16.

That would be a large increase from about 100 billion yen sales generated last financial year.

This field offers new challenges but it is also a business chance with big growth potential, Yamamoto told a briefing.

We will make a groupwide effort to build up our cloud business this year.

For the current year to March, Fujitsu expects operating profit to double to 185 billion yen. The company kept its 2011/12 targets for 250 billion yen in operating profit and 130 billion yen in net profit.

Yamamoto said the company can generate about 150 billion yen free cash flow annually, and acquisitions would be a possible use of this cash.

Fujitsu has recently been making headlines over the ouster of former president Kuniaki Nozoe, but Yamamoto reiterated that the scandal has had little impact on its operations.

Shinkin Asset Management fund manager Tomomi Yamashita said there have been market fears that Fujitsu would cut its earnings outlook, and the company's decision not to change its forecast could be seen as a positive.

He added that recovering IT demand has not been reflected in Fujitsu's share price.

They can expect a boost from IT services ... I don't think these expectations are fully factored into the share price, so it's cheap.

Fujitsu shares closed up 2.3 percent at 579 yen, outperforming a 0.5 percent rise in the benchmark Nikkei average.

(Additional reporting by Isabel Reynolds; Editing by Edwina Gibbs)

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