Fujitsu hit by price competition, reports Q3 loss

The rapid decrease in price of consumer electronics products hit Fujitsu hard during the third quarter, and is likely to wipe out gains made during the entire fiscal year, according to the company.

Sluggish demand and rapid drops in the price of semiconductors and flat-panel displays, both of which it supplies to other companies for use in consumer products, were major contributors to Fujitsu's lower operating profit, it said.

Consolidated net sales in the quarter from October to December were YEN 1 trillion ($US10.1 billion as of December 31, the last day of the period reported), down 2.3 per cent on the same period a year earlier, it said.

Operating income dropped 53 per cent to YEN 4.8 billion and the company reported a net loss of YEN 9.5 billion against a net profit of YEN 7.7 billion in the equivalent period a year earlier, which was helped by income from the sale of securities.

Fujitsu's IT operations contained some bright spots.

Revenues from the company's overseas IT outsourcing operations were higher. In particular, the company referenced a number of public-sector IT outsourcing deals in the U.K. It also saw higher sales of Unix servers, notebook computers, hard-disk drives and optical transmission systems.

Fujitsu revised its financial outlook for its full fiscal year to the end of March.

The company now expects consolidated net sales to be YEN 4.8 trillion, a reduction of YEN 100 billion on its previous forecast and about the same as it achieved in the previous fiscal year. Its cut its operating profit forecast by YEN 30 billion to YEN 170 billion and net profit forecast by YEN 15 billion to YEN 55 billion. Both profit predictions represent small improvements on the previous year.

It said the cuts were needed because the drop in income from its electronic devices business was expected to be greater than cost savings made throughout the year in manufacturing, the positive effect of restructuring and higher hardware sales.

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Martyn Williams

IDG News Service
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