Tokyo: October 25, 2000 --- Fujitsu Limited, the global leader in Internet-based information technology solutions, today reported consolidated net sales of 2,490.5 billion yen (US$23,061 million *) for the first half of Fiscal Year 2000 (April 1 - September 30, 2000). Robust sales of electronic devices as well as Internet-fueled growth in its telecommunications businesses helped to offset a decline in demand for large-scale servers (mainframes) and lower services & software sales outside Japan as well as the adverse effects of the continued high value of the yen. Overall, consolidated sales for the half increased by 2% over the same half-year period in fiscal 1999.
The company recorded consolidated operating income of 100.2 billion yen ($929 million) for the first half, a 58% increase over the comparable period in fiscal 1999, while consolidated net income increased over seven-fold to 17.2 billion yen ($160 million). The principal factor behind the marked improvement in profitability was the company's success in responding to the surging demand for advanced electronic devices. Successful cost-cutting efforts, while continuing to pursue cutting-edge R&D in next-generation mobile communications and other fields, also contributed to the favorable outcome.
Results by Business Segment
Despite solid growth in its outsourcing business in Japan, the company's systems integration (SI) business was adversely impacted by the slow pace of post-Y2K recovery in corporate IT spending. This was particularly the case outside Japan, where SI-related revenues declined. Lower overseas sales were further exacerbated by the high value of the yen, which reduced the converted value of foreign subsidiaries' contributions to sales. Consolidated first-half sales for the services & software sector as a whole were 897.4 billion yen ($8,310 million), a decrease of 1% from the same period in fiscal 1999.
In information processing, the continued proliferation of the Internet in Japan helped drive higher sales of UNIX servers as well as PCs, especially for the consumer market. However, due primarily to lower demand for its large-scale servers, domestic information processing sales as a whole declined. Overseas, information processing sales also declined, due to such factors as the impact of the high yen and accounting changes associated with last October's merger of Fujitsu's European computer manufacturing and sales operations with those of Siemens. (The resulting joint venture company, Fujitsu Siemens Computer (Holding) B.V., is subject to the equity accounting method.) Overall, first-half consolidated sales in the information processing sector were 690.0 billion yen ($6,389 million), down 9% from the corresponding period in the previous fiscal year.
Driven by unrelenting demand for faster, larger-capacity network infrastructure to serve the rapid growth of the Internet, Fujitsu's fiber optic transmission business in the US continued to expand robustly. In Japan, expansion of ISDN service, rapid growth in the number of i-mode subscribers, and the introduction of commercial-use IMT2000 next-generation mobile communications systems all helped spur sales of central office switching systems. Overall, consolidated telecommunications sales were 370.4 billion yen ($3,430 million), an increase of 7% over the previous half-year period.
Responding to the rapid growth in demand for flash memory and logic products, principally for cellular telephones and digital AV equipment, the company was able to ramp up production and achieve significant growth in sales. Likewise, the company responded aggressively to the growing demand for compound semiconductors and other devices central to the Internet infrastructure. As a result, overall consolidated sales of electronic devices jumped by 35% over the previous half-year period to 359.8 billion yen ($3,332 million).
In accordance with new accounting standards regarding pension and severance plans, Fujitsu amortized an amount equivalent to the unconsolidated portion of its unrecognized net obligation by placing marketable securities it holds in trust which is solely established for severance benefits. However, this had only a minor impact on net income for the half.
Fujitsu's financial results reflect the performance of 496 consolidated subsidiaries (509 in first half of FY1999), including ICL PLC, Amdahl Corporation, Fujitsu America, Inc., Fujitsu Microelectronics, Inc. and Fujitsu Network Communications, Inc., as well as 25 affiliates (27 in first half of FY1999), including Fanuc Ltd., Advantest Corporation and Fujitsu Siemens Computers (Holding) B.V., using the applied equity method.
- *Note:
- All yen figures have been converted to US dollars for convenience only at a uniform rate of $1 = 108 yen.
Projections for Fiscal Year 2000
With the Internet becoming firmly established as new kind of social infrastructure and IT investment gradually recovering, Fujitsu is optimistic about the prospects for growth in the IT industry. Looking to the second half of the fiscal year, the company expects that a rebound in corporate investment in information systems will lead to increased sales of services & software. Moreover, although there is some concern about tight supplies of certain parts and components, Fujitsu anticipates continued steady growth in sales of fiber optic transmission systems and UNIX servers - key foundations for the Internet infrastructure - as well as PCs. In regard to Fujitsu's UNIX server business, the company will begin sales of these products in the North American market during the second half of fiscal 2000 through its U.S.-based subsidiary, Amdahl Corporation. At the same time, Amdahl will restructure its server business to concentrate its resources on the open systems market, where growth is expected in the future. Although it will continue to market existing models of its IBM-compatible large-scale servers, Amdahl will not sell future generations of these systems. In the electronic devices area, Fujitsu will aggressively respond to rapidly growing demand by further expanding its production capacity.
Taking into account these factors, and revising the projections announced on April 28 to reflect anticipated costs associated with the above-mentioned restructuring of Amdahl's server business, Fujitsu at this time makes the following projections regarding consolidated earnings for Fiscal Year 2000:
Fujitsu Limited Consolidated Earnings Forecast for FY2000
(April 1, 2000 - March 31, 2001)
| billion yen |
 |
change from FY1999 |
| Net Sales | 5,700 | + 8% | |
| Operating Income | 310 | + 107% |
| Net Income | 45 | + 5% |
Note: Due to the inherent uncertainty of such factors as currency exchange rates, stock market conditions in Japan and the US, and the supply situation for parts and components, actual business results may differ from the above projections.
About Fujitsu
Fujitsu Limited (TSE: 6702) is a leading provider of Internet- based information technology solutions for the global marketplace. Comprising over 500 group companies and affiliates worldwide - including ICL, Amdahl and DMR Consulting - it had consolidated revenues of 5.26 trillion yen ($49.6 billion) in the fiscal year ended March 31, 2000. Fujitsu's pace-setting technologies, world-class computing and telecommunications platforms, and global corps of over 60,000 systems and services experts make it uniquely positioned to unleash the infinite possibilities of the Internet to help its customers succeed. Altogether, the Fujitsu Group has 188,000 employees and operations in over 100 countries.
Internet: http://www.fujitsu.com/
- Press contacts
-
Yuri Momomoto, Bob Pomeroy
Fujitsu Limited, Public Relations
Tel: +81-3-3215-5236 (Tokyo)
Fax: +81-3-3216-9365
E-mail: pr@fujitsu.com
Full tables and Supplementary Figures - see Investor Relations