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Guess who's still doing OK in PCs? Fujitsu, though it has troubles too

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Japanese IT conglomerate Fujitsu has turned in its financial report for the second quarter of fiscal 2012: and the results were mixed, as has been the case for most IT suppliers wrestling with an uncertain global economy.

For the quarter ended in September, Fujitsu had total revenues of ¥1,114bn, up seven-tenths of a per cent over the prior period, and after some cost cutting, the company was able to boost operating income to ¥32.7bn, up 35.3 percent. However, in the year ago period, Fujitsu had a ¥16.7bn deferred tax benefit, and this time around it had a ¥7.5bn deferred tax hit, and those shifts cut net income by more than half to ¥12.7bn in the quarter. This was better than Fujitsu had been telling Tokyo and Wall Street, by the way.

The Technology Solutions part of Fujitsu, which peddles systems, storage, and networking products as well as myriad IT services, posted ¥713.3bn in revenues, down 1.8 per cent. Revenues in this group inside of Japan were actually up 1.3 per cent to ¥478.2bn, but outside of the Land of the Rising Sun, sales dropped 7.6 per cent to ¥235.1bn.

Within Technology Solutions, system platform sales dropped 2.8 per cent to ¥137.6bn and services revenues fell 1.5 per cent to ¥575.6bn. Fujitsu said in its financial statement (PDF) that it saw a decline in its Sparc64-based Unix systems, mostly in the United States and Europe, as customers awaited machines based on new models.

Fujitsu disclosed the technical details of the "Athena" Sparc64-X processors back at Hot Chips 24 in August and then talked about the future Athena systems at Oracle's OpenWorld 2012 shindig in October. With the current Sparc64-VII+ systems looking very long in the tooth now, you can't blame Solaris shops that like Fujitsu iron for waiting to see what these Athena machines might have to offer in terms of bang for the buck.

Fujitsu added that large-scale system sales, which can include either x86 or Sparc64 iron, were down particularly in the financial services sector. Telecom gear helped prop up sales in the quarter, but could not offset the server declines. Operating income for the systems part of the Technology Solutions group was ¥13.7bn, down 1.4 per cent, and that was despite lower x86 server component costs. The services segment of the Technology Solutions group had an operating income of ¥32.4bn, up 4.4 per cent, so total operating income for the group was up, but that was despite declines in Unix system sales and not because of them, rising 3 per cent to ¥46.2bn.

The Ubiquitous Solutions group at Fujitsu - which makes PCs, smartphones, tablets, and car audio and navigation systems, among other things - did pretty well, all things considered. PC and mobile phone sales were up 20.2 per cent to ¥249.3bn. Fujitsu said that thanks to large volume orders from corporations, PC unit shipments were up, but consumer PC demand was weak. Moreover, PC prices dropped during the quarter, so overall PC revenues actually went down in fiscal Q2. Mobile phones were up, tablet sales were expanding, and car systems dropped during the quarter, with the so-called "mobilewear" segment of Fujitsu's Ubiquitous Solutions group posting a 10.2 per cent decline to ¥65.4bn. Despite all of this, Fujitsu was able to pull up profits for this group by 8 per cent to ¥12.4bn.

Fujitsu's Device Solutions chip business continued to be under pressure, with sales down 6.3 per cent to ¥138.3bn. Battery sales to companies in the United States were off, but semiconductor chip package sales to Asian chip makers were up. Sales of chips used in audio-visual equipment and in industrial equipment were also down. However, tight controls allowed Fujitsu to shrink its losses a tiny bit to ¥3.3bn compared to a ¥3.8bn operating loss in the year-ago period.

Looking ahead, Fujitsu is forecasting that it will rake in ¥2,925bn in fiscal 2012 ending next March in its Technology Solutions group, and that is ¥60bn less than it was projecting three months ago. Operating income is expected to remain the same at around ¥180bn.

The Ubiquitous Solutions unit is anticipated to rake in ¥1,145bn for the full fiscal year, with an operating income of ¥20bn, with Device Solutions bringing in ¥565bn and posting an operating loss of ¥12bn. Total sales for fiscal 2012 are now projected to be ¥4,420bn, ¥110bn lower than the July projection with net income of ¥25bn, down ¥35bn from what Fujitsu was hoping to rake in when it ran the models three months ago. ®

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