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  7. Fujitsu Reports Fiscal 2011 First-Quarter Financial Results

July 28, 2011
Fujitsu Limited

Fujitsu Reports Fiscal 2011 First-Quarter Financial Results

- Quarterly loss posted; projections of higher sales and earnings for the full fiscal year remain unchanged -

Tokyo, July 28, 2011

Fujitsu Limited, a leading provider of ICT-based business solutions for the global marketplace, today reported a consolidated net loss of 20.4 billion yen (US$252 million) for the first quarter of fiscal 2011 (April 1 to June 30, 2011), representing a deterioration of 22.0 billion yen from the first quarter of fiscal 2010. This was in line with projections of business results announced on June 17, 2011, which also remain unchanged in the anticipation of year-on-year increases in both sales and earnings.

First quarter consolidated net sales totaled 986.0 billion yen (US$12,173 million), a decline of 5.8% from the corresponding period of the previous fiscal year. In Japan, sales fell by 5.3%, to 619.6 billion yen (US$7,649 million) as the Great East Japan Earthquake adversely impacted car audio and navigation systems, mobile phones, and LSI devices. Net sales outside of Japan declined 6.7%, to 366.3 billion yen (US$4,522 million) due to the effect of the stronger yen on exchange rates and lower sales of electronic components and car audio and navigation systems.

Fujitsu recorded an operating loss of 17.1 billion yen (US$211 million), representing a deterioration of 27.1 billion yen compared to the first quarter of fiscal 2010. This was the result of overall lower sales mainly due to earthquake-related delays to contracts, deliveries, and the procurement of certain parts and components. In addition, Fujitsu recorded a 7.5 billion yen loss on damage as a non-operating loss in the first quarter, primarily representing overhead expenses incurred during production stoppages.

"The impact of the Great East Japan Earthquake on the procurement of raw materials and components has for the most part abated," commented Masami Yamamoto, President of Fujitsu with regard to post-earthquake prospects.

For the second half of the fiscal year, in anticipation of growth in its domestic services business and PCs against the backdrop of a recovery in ICT investments in Japan, the company is projecting higher sales and earnings for the full fiscal year despite the continuing effects of a strong yen.

Business Segment Results

Consolidated net sales in the Technology Solutions segment which includes the Services and System Platforms sub-segments, decreased 1%, to 659.1 billion yen (US$8,137 million). This was mainly attributable to the impact the Great East Japan Earthquake had on sales of network products, as well as declining sales of mobile phone base stations with the industry still in the midst of transitioning to the full-fledged deployment of commercial LTE services. Sales outside Japan declined 2.2%. Excluding the impact of exchange rate fluctuations, however, sales increased by 2.0%, primarily as a result of higher sales of optical transmission systems in the US and infrastructure services to the Australian government.

The segment posted operating income of 2.5 billion yen (US$31 million), a decrease of 6.0 billion yen compared to the first quarter of fiscal 2010. In Japan, profitability declined due to lower sales as the result of the earthquake, as well as the impact of lower sales of mobile phone base stations. Outside Japan, despite the positive effects of higher sales of optical transmission systems in the US, income declined due to the continued impact of fiscal austerity measures in the UK on sales of infrastructure services.

Net sales in the Ubiquitous Solutions segment totaled 235.4 billion yen (US$2,906 million), a decline of 15% compared to the same period in fiscal 2010. Sales in Japan declined 15.8% on a decline in PC sales due to escalating price competition and a drop in mobilewear sales. In the mobile phone business, even with an expanding market for smartphones and the positive impact of the merger of Toshiba Corporation's mobile phone business, sales declined overall on account of lower unit sales of feature phones resulting from delays in the procurement of some components due to the earthquake. Sales outside Japan declined 12.3%. PC sales were on par with the first quarter of the previous fiscal year, however, sales of mobilewear devices declined, having been impacted by interruptions in automobile production outside Japan due to shortages in the supply of components from Japan. Operating income for Ubiquitous Solutions was at the breakeven point, having deteriorated 10.6 billion yen compared to the first quarter of the previous fiscal year.

Net sales in Device Solutions amounted to 140.8 billion yen (US$1,738 million), a decline of 11.1% compared to the first quarter of fiscal 2010. Although demand for mobile phones increased, overall LSI device sales fell as a result of the earthquake, particularly for digital AV and automobile applications. Electronic component sales outside Japan also declined. The Device Solutions segment recorded an operating loss of 1.0 billion yen (US$12 million), representing a deterioration of 7.0 billion yen.

Complete information on Fujitsu's first quarter, fiscal 2011 financial results, including financial tables, explanation of results and supplementary information, may be found at: http://www.fujitsu.com/about/ir/

* All yen figures have been converted to U.S. dollars, for convenience only, at a uniform rate of US$1 = 81 yen, the approximate closing rate on June 30, 2011.

Note: These materials may contain forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors:
- General economic and market conditions in key markets (particularly in Japan, North America, Europe, and Asia, including China)
- Rapid changes in the high-technology market (particularly semiconductors, PCs, etc.)
- Fluctuations in exchange rates or interest rates
- Fluctuations in capital markets
- Intensifying price competition
- Changes in market positioning due to competition in R&D
- Changes in the environment for the procurement of parts and components
- Changes in competitive relationships relating to collaborations, alliances and technical provisions
- Risks related to public regulations, public policy and tax matters
- Risks related to product or services defects
- Potential emergence of unprofitable projects
- Risks related to R&D investments, capital expenditures, business acquisitions, business restructuring, etc.
- Risks related to natural disasters and unforeseen events
- Changes in accounting policies

About Fujitsu

Fujitsu is a leading provider of information and communication technology (ICT)-based business solutions for the global marketplace. With approximately 170,000 employees supporting customers in over 100 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.5 trillion yen (US$55 billion) for the fiscal year ended March 31, 2011. For more information, please see:www.fujitsu.com.

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