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Fujitsu Reports FY2001 Third Quarter Financial Results
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Contact:
Yuri Momomoto or Robert Pomeroy
Fujitsu Limited, Public Relations
Tel: +81-3-3215-5259 (Tokyo)

Details and Supplementary Information

Fujitsu Reports FY2001 Third Quarter Financial Results

Sales Impacted by Deteriorating Global Economy

Tokyo, January 29, 2002-Fujitsu Limited, the global leader in Internet-based information technology solutions, today reported consolidated net sales of 1,058.7 billion yen (US$8,021 million) for the third quarter of Fiscal Year 2001 (October 1 - December 31, 2001), a decline of 13% over the same period in fiscal 2000. Amidst a worsening global economy, Fujitsu faced a difficult operating environment in the third quarter.

The terrorist incidents of September 11 contributed to a deepening downturn in the United States, while the pace of growth further slowed in Europe and Asia, and the Japanese economic environment deteriorated, as exports and capital expenditure contracted and consumer spending weakened. Although inventory adjustments addressing the worsening supply-demand balance in such areas as mobile phones progressed, and there were indications late in the period that consumer demand was bottoming out in the U.S. and some other regions, continuing cutbacks in corporate investment, especially among telecommunications carriers, along with further deterioration in a semiconductor market that had yet to hit bottom made for a difficult quarter overall.

Fujitsu recorded a consolidated operating loss of 45.8 billion yen (US$347 million) for the quarter, compared with an operating profit of 7.6 billion yen in third quarter of fiscal 2000. Operating income for services & software increased more than five-fold, boosted by higher domestic earnings in services and progress in the restructuring of overseas subsidiaries. An operating profit was also recorded in information processing, where higher sales of servers and file storage systems helped to offset the impact of lower sales of small form factor magnetic disk drives and personal computers. On the other hand, operating losses in telecommunications widened, as North America-based telecommunications carriers in particular continued to postpone new investments, leading to weaker demand and pricing for optical transmission systems. Electronic devices recorded a large operating loss for the quarter, impacted by a major weakening of demand that led to lower capacity utilization levels and severe price erosion.

In addition, in an aggressive move to restore profitability, Fujitsu took a charge to earnings to cover the costs of exiting the business of small form factor magnetic disk drives for desktop PCs and reorganizing its overseas semiconductor production facilities. As a result, the company recorded a consolidated third quarter net loss of 106.1 billion yen (US$804 million), compared to a net loss of 69.0 billion yen in the previous corresponding period.

Results by Business Segment
Services & Software
Consolidated third quarter sales of services & software were 410.5 billion yen (US$3,110 million), an increase of 3% from the same period in fiscal 2000. There was steady growth in Japan sales of outsourcing and other services, and the low value of the yen raised the converted value of overseas subsidiaries' contributions to sales. Corporate cutbacks in IT spending in the U.S. and Europe, however, resulted in lower sales of services there, holding overall sales growth to just 3%.

Information Processing
In information processing, consolidated third quarter sales were 322.4 billion yen (US$2,443 million), down 11% from the corresponding period in the previous fiscal year. Domestic sales of large-scale servers and file storage systems continued to increase, and results were also favorable for new mobile phone models introduced in the second quarter. However, global demand for personal computers declined considerably compared to the previous year, and PC sales in Japan fell. As a result, total domestic information processing sales declined. This, together with lower overseas sales reflecting the impact of Fujitsu's exit from production of small form factor hard disk drives for desktop PCs, resulted in an overall sales decline for the category.

Telecommunications
Consolidated third quarter telecommunications sales were 126.9 billion yen (US$961 million), a decrease of 20% from the same period in fiscal 2000. In Japan, sales of next-generation IMT-2000 switching and base station systems increased. Overseas, however, there was severe tightening of investment by telecommunications carriers, particularly in North America, and a recovery is still not in sight. Accordingly, sales of optical transmission systems for North America-based carriers declined precipitously, reducing overall sales for the category.

Electronic Devices
Consolidated third quarter sales of electronic devices fell 41% to 119.7 billion yen (US$907 million). Unprecedented poor conditions in the semiconductor market continued, as a major decline in demand forced continued large-scale inventory and production adjustments. Sales of all key products, including flash memory, logic ICs, SAW filters, and compound semiconductors, were down significantly.

Revised Projections for Fiscal Year 2001
Since the last earnings projections in October, the U.S. economic downturn has deepened, and the seriousness of structural problems in the worldwide economy has increased. While there were some indications that consumer spending in the U.S. may have bottomed out toward the end of the year, since then it appears that capital investment and consumer spending for the Japanese economy are likely to slow. Moreover, there is no immediate prospect for recovery by North America-based telecommunications carriers, and a turnaround in semiconductor demand cannot be expected within this fiscal year.

Although third quarter results were roughly in line with the previous forecast, fourth quarter financial results in such areas as electronic devices, optical transmission equipment, personal computers, hard disk drives and services are likely to be greatly affected by the above-mentioned factors. In addition, the weakened yen will increase the converted value of the costs associated with overseas restructuring activities, and further restructuring is needed in each division.

Taking these factors into consideration, Fujitsu has revised the earnings projections it made in October as follows:

Fujitsu Limited Consolidated Earnings Forecast for Fiscal 2001
(Billion Yen)

FY2001 Projections

Previous Forecast
(As of Oct. 24, 2001)
Revised Forecast
(As of Jan. 29, 2002)
Difference
Net Sales 5,200 5,000 - 200
Operating
Income (Loss)
0 (75) - 75
Extraordinary
Income (Loss)
(350) (420) -70
Net Income
(Loss)
(310) (380) - 70
FY2000 (actual)


5,484.4
244.0

(32.1)

85.0

Notes:
  • All yen figures have been converted to US dollars for convenience only at a uniform rate of $1 = 132 yen.
  • FY 2001 from April 1, 2001 - March 31, 2002; FY 2000 from April 1, 2000 - March 31, 2001
  • Due to uncertainties relating to changes in demand for products and components in key markets (Japan, U.S., Europe, etc.), currency exchange rate fluctuations, Japan and U.S. stock market conditions, and other factors, actual results may vary substantially from projections above.

About Fujitsu
Fujitsu is a leading provider of Internet-focused information technology solutions for the global marketplace. Its pace-setting technologies, best-in-class computing and telecommunications platforms, and worldwide corps of systems and services experts make it uniquely positioned to unleash the infinite possibilities of the Internet to help its customers succeed. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.48 trillion yen for the fiscal year ended March 31, 2001.
For more information, see: http://www.fujitsu.com/

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This release contains "Material Information" as specified under Article166 of the Securities and Exchange Law of Japan. If you read the contents of this release, you or any other person with whom you share the acquired information will be deemed the primary recipients of corporate insider information and will be prohibited from purchasing, selling, or making other transactions of shares or securities of Fujitsu Limited until 12 hours has elapsed from the time when this press release was made (approximately 3:00 a.m. on January 30, 2002, Japan time).

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