Fujitsu Services drops IPO plan
Downgrades its valuation
Japanese technology giant Fujitsu Limited has told its UK-based subsidiary Fujitsu Services that it must drop its long-stated ambition to spin out on the stock exchange.
The services arm will instead become the "pillar" of a global services business, the firm said this week.
After the dotcom bust, Fujitsu Services retrenched its business interests to Europe. The firm said the globalisation of the IT industry was broadening its horizons again.
On Monday, the firm responded to press reports that it was about to revise its financial forecast for the second half of fiscal 2006 with a statement that said: "No such decision has been made at this time".
On Tuesday, it revised its forecast for the second half of fiscal 2006. The firm's net asset valuation was reduced by ¥350bn (£1.52bn) after restating conditions at Fujitsu Services and its US and European product business.
Sales of telecommunications goods were lower than expected, the firm said in a statement, so it anticipated losses and a devaluation of its US and UK manufacturing stock.
Fujitsu Services has performed well since 2002 when it pulled itself out of a loss-making run during a widespread slump brought on by the the dotcom bust, the statement said. Its market valuation had exceeded the book-value of the Japanese parent's investment.
However, the value of the services arm's net assets had dropped below the book value of Fujitsu's investment. This, it said, was the result of the payment of goodwill on acquisitions. Also, since converting its accounts to International Financial Reporting Standards in 2005, there had emerged an "unrecognised obligation for retirement benefits".
Fujitsu Limited's anticipated full year results for fiscal 2006, ending 31 March 2007, were revised from a ¥55bn profit to a ¥275bn loss. Sales were unchanged. ®