1.Software & Services

	Three months ended June 30
	FY2003		Change
Net Sales	(Billion Yen)		FY02 to FY03
Japan	266.0		+4.2%
Overseas	117.2		- 6.7%
Total	383.3		+0.6%
Operating Profit	(3.6)		-4.5 billion yen
Net Sales
Solutions/SI	154.8		+6.1%
Infrastructure Services	228.5		-2.8%

In Japan, although IT spending overall remained sluggish, the company achieved a 4% sales increase due to strong sales in the government, manufacturing and healthcare sectors, compared to the first quarter of fiscal 2002. Sales in the U.S. decreased, reflecting the overall weakness in IT spending. In the U.K., however, last year's sale of unprofitable businesses resulted in improved profitability, although sales were lower compared to the previous year. Profitability in this segment deteriorated in the first quarter as a result of seasonal factors impacting sales, weak market conditions, and higher expenses associated with Linux development costs and other factors.

Sales of solutions and systems integration services increased, bolstered by continued strength in the public sector field in connection with the roll-out of the e-Japan initiative and sales of solutions, such as supply chain management and enterprise resource planning software, such as GLOVIA, particularly to manufacturers that are expanding their global operations. An increase in marketing expenses for solutions, however, held operating income at a level roughly equivalent to last year's results.

The company posted lower sales of infrastructure services in the first quarter. The corporate outsourcing business had a strong quarter, but sales of server-related software & services remained weak. As broadband network infrastructure has grown more pervasive, the market for corporate network services is expanding, but price competition is also intensifying, putting pressure on profit margins.

At U.K. subsidiary Fujitsu Services, the decision to exit unprofitable businesses last year has resulted in lower sales but a sharper business focus. That sharper focus, along with contributions from new orders from the government associated with the private finance initiative, has returned that unit to profitability.

	FY2003		Change
	(Billion yen)		FY02 to FY03
Net Sales	2,120.0		+4.7%
Operating Profit	190.0		+13.4 billion yen
Solutions/SI	1,015.0		+7.9%
Infrastructure Services	1,105.0		+1.8%

The spread of broadband networking clearly expands business opportunities for Fujitsu in this sector, and the company is well-positioned to take advantage of these trends. In overseas markets, while circumstances differ depending on the individual operating entity, the company anticipates being able to meet the earnings projections announced at the start of the fiscal year. While there is some concern over the intensified price competition accompanying the market shift toward open standards, the company is also optimistic about its plans to release a stream of new software & services products linked with new hardware offerings under its TRIOLE IT infrastructure initiative. Taking these factors into account, Fujitsu's earlier earnings projections for the full year remain unchanged.