Fujitsu plans cuts, predicts two more years to recovery

CFO paints gloomy picture

ComputerWire: IT Industry Intelligence

Fujitsu Ltd is planning job cuts and believes that the market will not recover for another two years. The Tokyo, Japan-based computer giant said the WorldCom scandal and concerns over the US economy, will almost certainly mean further restructuring this year, despite the fact that its profit target remains on course.

Fujitsu chief financial officer Takashi Takaya said in an interview that one target for job cuts and consolidation is the company's US telecommunications equipment business, to which the company is heavily exposed. Also at risk is Fujitsu's domestic hard disk drive operations, with a consolidation of production facilities now under consideration.

The demise of WorldCom has meant that the company will lose approximately $20m in orders, and it believes that the scandal will delay a recovery in the global communication equipment sector. Takaya added: "We have to slim down further in North America so that we can hold on until a recovery, possibly in about two years."

Over the last year Fujitsu, like other Japanese chip and electronics giants took drastic restructuring steps by closing plants and slashing jobs when confronted by the economic downturn. It is likely that the proposed restructuring will include both headcount reductions and cutting facilities.

Regarding the company's earnings performance, Takaya said the company is not thinking of cutting its operational profit target of 100bn yen ($857m), since the weakness in the telecoms equipment market is expected to be offset by strengths in other areas such as semiconductors.

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