Fujitsu says contract with NHS to be ended

TOKYO (Reuters) - Fujitsu Ltd (6702.T) said on Thursday its 896 million pound contract with the National Health Service (NHS) would be terminated after talks to revise the terms of the contract fell through.

A group led by the Japanese electronics maker won the contract in 2004 to run national health service patient records in the south of England, and has since been working on the project.

Fujitsu did not give details of the renegotiation talks, including which side initiated them. It said it had set aside provisions for a potential loss from the termination, and there would be no impact on its earnings for the current business year.

Fujitsu expects its operating profit to grow 7.3 percent in the year ending March 2009 to 220 billion yen (1 billion pounds).

The NHS deal was due to run until 2013 and covered an area from Sussex to Cornwall and the Isle of Wight to Milton Keynes.

Under the terms of the original agreement, Fujitsu was the prime contractor, while BT (BT.L), PricewaterhouseCoopers, Tata Consultancy Services (TCS.BO) and IDX Systems were also in the winning consortium.

The Financial Times said the dispute centred on the NHS's demand for more flexibility in providing electronic care records for patients, and that BT, which runs the project for the NHS in London, was favourite to take over from Fujitsu.

Ahead of the Fujitsu comments, shares of the chips-to-computers conglomerate closed up 1.5 percent at 838 yen, underperforming the Tokyo stock market's electrical machinery index .IELEC.T, which gained 3.3 percent.

(Reporting by Kiyoshi Takenaka; Editing by Chris Gallagher)