OREANDA-NEWS. October 31, 2012.   Fujitsu today reported consolidated net income of 12.7 billion yen (USD 163 million) for the second quarter of fiscal 2012, a year-on-year decline of 13.4 billion yen.

Second-quarter consolidated net sales totaled 1,114.4 billion yen (USD 14,287 million), essentially unchanged from the same period of fiscal 2011. Sales in Japan rose by 4.5%. Although sales of LSI devices and PCs declined, sales of mobile phones and network products increased. Sales outside of Japan fell by 6.4%. On a constant currency basis, sales declined by 3%. Sales of infrastructure services were lower, primarily in Europe due to the impact of the deteriorating economic environment, and sales of optical transmission systems to North America and for UNIX servers decreased.

Operating income amounted to 32.7 billion yen (USD 419 million), a year-on-year increase of 8.5 billion yen from the corresponding period of fiscal 2011. The Device Solutions segment was adversely affected by lower demand and the PC business was negatively impacted by lower sales prices, however, the Company benefited from higher mobile phone sales and Group-wide efforts to generate cost-efficiencies. In the services businesses, performance in Japan was slightly better than projections thanks to recovery in ICT spending, while results outside of Japan were adversely affected by deteriorating economic conditions in Europe.

Although income before income taxes and minority interests increased, net income deteriorated. Contributing factors included the decision made in the second quarter of fiscal 2011 to liquidate a subsidiary in Europe and a stock transfer executed in line with group reorganization, which had the effect of lowering tax expenses.

For the first half of the fiscal year (from April to September), a net loss of 11.0 billion yen (USD 141 million) was recorded, a deterioration of 16.8 billion yen from the first half of fiscal 2011. Operating income was 7.6 billion yen (USD 97 million), an increase of 0.6 billion yen from the first half of fiscal 2011, and an improvement of 2.6 billion yen over July projections.

In light of the outlook for continued weak demand for LSI devices and electronic components as well as decreased sales in services business outside of Japan, full-year sales projections have been revised downward by 110.0 billion yen from projections announced in July, to 4,420.0 billion yen. For operating income, full-year projections have been revised downward by 35.0 billion yen, to 100.0 billion yen.

"In the second quarter, we were able to see solid performance supported by favorable sales in Japan of our technology solutions and smartphone businesses," commented Masami Yamamoto, President of Fujitsu. "We revised our full-year forecasts downward as the economy has yet to fully recover. Nonetheless, we will continue to accelerate structural reforms and bolster a framework whereby Fujitsu can fully contribute to our customers as their global ICT partner."
Business Segment Results

Consolidated net sales in the Technology Solutions segment amounted to 713.3 billion yen (USD 9,145 million), down 1.8% from the second quarter of fiscal 2011. Sales in Japan increased 1.3%. In system integration services, despite the impact of fewer large-scale system deals and a shift toward spending on hardware by telecommunications carriers, sales as a whole increased due to a recovery in manufacturing and public sector spending. Sales outside Japan declined 7.6%. Contributing factors included a shift toward spending on wireless network equipment by North American telecommunications carriers, resulting in lower sales of optical transmission systems as well as for UNIX servers.

The segment posted operating income of 46.2 billion yen (USD 592 million), up 3.0 billion yen compared to the second quarter of fiscal 2011. In Japan, despite the impact of fewer large-scale system deals and incremental upfront R&D spending mainly for network products, income rose overall on the back of higher network-related sales and the impact of cost reduction for X86 servers. Outside Japan, operating income was adversely affected by lower sales of optical transmission systems to North America and for UNIX servers.

Net sales in the Ubiquitous Solutions segment were 314.7 billion yen (USD 4,035 million), an increase of 12.3% from the second quarter of fiscal 2011. Sales of mobile phones increased as a result of the introduction of many new models. In Japan, sales of consumer PCs declined due to weak demand and lower sales prices. Outside Japan, unit shipments for PCs increased in EMEA, but a fall in market sales prices left sales essentially unchanged from the same period of the previous year. Sales of the Mobilewear sub-segment's car audio and navigation systems declined, as automobile production was higher in the same period of fiscal 2011 following the Great East Japan Earthquake. The Ubiquitous Solutions segment posted an operating income of 12.4 billion yen (USD 159 million), an increase of 8.0 billion yen from the second quarter of fiscal 2011.

Net sales in Device Solutions amounted to 138.3 billion yen (USD 1,773 million), a decline of 6.3% compared to the second quarter of fiscal 2011. LSI device sales decreased on lower demand, primarily for LSI devices used in digital audio-visual equipment and industrial equipment. Sales of electronic components, particularly batteries, also fell, but sales of semiconductor packages increased. The Device Solutions segment recorded an operating loss of 3.3 billion yen (USD 42 million), representing an improvement of 0.4 billion yen from the second quarter of fiscal 2011.