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Fujitsu has warned of widening losses this year as it reported declining sales in its key markets that were only partially offset by Japan's rollout of 3G mobile technology.

The Japanese-based IT giant reported a consolidated first-half year net loss of 174.7 billion yen ($1,468 million) compared to net income of 17.2 billion yen ($145 million) in the same period last year. Sales for the first half of the fiscal year were 2,387.7 billion yen ($20,065 million), down four per cent on sales for 1H2000 of 2,490.5 billion yen ($20,065 million).

Fujitsu's results were impacted by cutbacks in IT-related corporate spending, particularly in the US, and sluggish global demand for personal computers and mobile phones.

Revenues were boosted by sales related to the roll-out of IMT-2000 third-generation mobile communications in Japan and services revenues, but these were offset by the combination of weak demand and lower prices for small form factor magnetic disk drives and electronic devices. Fujitsu's optical transmission system sales were weak, as demand for these high-ticket devices from debt-ladened telcos, particularly in North America, slowed to a crawl.

Inventory adjustments and lower capacity utilisation also hit Fujitsu's bottom line.

Fujitsu doesn't foresee an early recovery in demand and amid uncertainty about the effects of the September 11 attack on its business has revised down sales and earning projections issued in July.

It now expects full year losses to amount to 310 billion yen ($2,605 million) against the 220 billion yen ($1,849 million) previously forecast, sales are expected to be down to 5,200 billion yen ($43.7 billion) from July's forecast of 5,400.0 billion yen ($45.4 billion).

Fujitsu is currently restructuring its business to focus more on sales and services. The company plans to cut 4,500 more jobs by the end of its financial year (April 1), taking the total number of job losses this year to more than 20,000, equivalent to around 11 per cent of Fujitsu's workforce. ®

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Fujitsu Reports FY2001 First-Half Financial Results

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