October 25, 2001 – Tokyo, Japan – Japanese electronics conglomerate Fujitsu Ltd. said it slipped deep into the red in the first half of its business year and cut 4,500 jobs as it struggles with a severe info-tech slump.
Hit by sputtering demand for semiconductors and communications equipment, Fujitsu posted a consolidated net loss of $1.43 billion for the April – September period.
It also slashed its earnings targets for the full year to next March, cutting its consolidated operating profit forecast to zero, in line with analysts’ expectations and recent media reports but down sharply from a July forecast of an 80 billion yen profit.
“It was not a good first half, and there is still the risk that operating profit will turn negative for the full year,” said UBS Warburg analyst Yoshiharu Izumi. “They seem a bit optimistic given the cloudier outlook — especially for software — in Europe and the United States.”
The company expanded a plan announced in August to shed 16,400 jobs — including 11,400 overseas — this business year and topped up its restructuring charge for the year to 350 billion from 300 billion yen. Among the additional 4,500 job cuts, 4,000 are to be made overseas.
“Since we issued our last forecasts in July, the possibility has increased that the US economy will slip into recession, and that is having a widening impact globally,” the company said.
It boosted its 2001 – 2002 consolidated net loss forecast to 310 billion yen, on revenues of 5.2 trillion yen, compared with a July forecast of a 220 billion yen net loss on 5.4 trillion yen in revenues.
The company also trimmed its capital spending and production plans in its chip division, which has been hit by the global semiconductor industry’s worst downturn ever.
Fujitsu has promised sweeping restructuring measures to restore profitability while it rides out the prolonged slump in demand for personal computers, cell phones, networking equipment and other info-tech goods.
It has targeted hefty savings in procurement costs and has shut a handful of overseas businesses, including US operations making 3.5-inch hard drives for desktop PCs and private branch exchange communications equipment.
The company also moved more quickly than its rivals to stop making DRAM chips to focus on computer software and services, which promise steadier profitability.
Fujitsu said last week it was in talks with IBM Corp. about possible cooperation in a variety of software and service operations.