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Fujitsu Reports FY 2004 First-Quarter Financial Results

First-Quarter Sales Up 7.4% Year-on-Year, Operating Loss Narrows on Sales Gains and Continuing Cost Reductions

Fujitsu Limited

Tokyo, July 29, 2004

Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales of 1,008.1 billion yen (approximately US$9,249 million*) for the first quarter of fiscal 2004 (April 1, 2004 - June 30, 2004), an increase of 7.4% over the same period last year. Although first-quarter sales in the Software & Services segment rose only slightly year-on-year, sales of semiconductors, hard disk drives and plasma display panels increased significantly. Sales also rebounded sharply in servers, mobile and IP networks and other categories in Fujitsu's Platforms segment.

Because of the seasonality of IT spending patterns in Japan, Fujitsu has typically posted a consolidated operating loss in the first quarter. However, thanks to higher sales and continued cost-reduction measures, the company was able to narrow the first-quarter operating loss to 4.3 billion yen (US$40 million), a significant improvement over the 37.8 billion yen operating loss posted in the first quarter of fiscal 2003 and its lowest first-quarter operating loss since it began reporting quarterly financial results.

The company posted a first-quarter consolidated net loss of 11.8 billion yen (US$109 million), a major turnaround from the 39.8 billion yen net loss recorded in the first quarter of fiscal 2003.

"We've made a solid start out of the gate in fiscal 2004, with a substantial rebound in our Platforms businesses and better-than-forecast results in Electronic Devices," said Fujitsu Limited president Hiroaki Kurokawa. "Together with continuing progress in strengthening our financial position, I believe these results put us on track for a very strong year."

Business Segment Results

Net sales in Software & Services rose a modest 0.3% to 384.5 billion yen (US$3,528 million). Continued severe price competition was one of several factors that negatively impacted performance in Japan. Overseas, however, the segment was profitable, thanks to the impact of business restructuring initiatives undertaken last year as well as contributions from large-scale public-sector outsourcing contracts won by Fujitsu Services in the UK. Overall, the segment recorded an operating loss for the quarter of 10.9 billion yen (US$101 million), a 7.3 billion yen decline in comparison with the same quarter last year.

Net sales in the Platforms segment were 359.4 billion yen (US$3,298 million), an increase of 15.1% over the same period last year. Sharp advances in sales both in Japan and overseas reflected the recovery in IT spending during the quarter. UNIX servers and mainframes for mission-critical enterprise systems posted particularly strong sales gains, as did financial terminals able to accommodate new banknotes in Japan. While PC sales were affected by declining prices, hard disk drives - particularly those for notebook PCs - continued to enjoy strong sales growth. Moreover, wider use of broadband networks and 3G mobile phones resulted in increased sales of transmission systems and mobile network base stations to handle the growth in data loads. The Platforms segment recorded an operating loss of 7.0 billion yen (US$65 million), a major improvement of 12.3 billion yen over the comparable period last year.

In the Electronic Devices sector, continued strong demand for logic chips and Flash memory used in mobile phones and digital AV products, as well as for plasma display panels and liquid crystal displays in advance of this summer's Olympic Games in Athens, helped drive a 25.4% gain in net sales to 203.9 billion yen (US$1,871 million). Enjoying a fourth consecutive profitable quarter, the segment recorded operating income of 23.8 billion yen (US$219 million), an improvement of 30 billion yen over the same period last year.

FY 2004 Earnings Projections

Fujitsu maintained unchanged the FY 2004 full-year consolidated earnings projections of 4,950 billion yen in net sales, 200 billion yen in operating income, and 70 billion yen in net income that it made at the beginning of the fiscal year.

Complete information on Fujitsu's First-Quarter FY 2004 financial results, including financial tables, explanation of results and supplementary information, may be found at:

Yen figures are converted to US dollars for convenience only at a uniform rate of $1 = 109 yen, the closing exchange rate on June 30, 2004.

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 Japan, North America and Europe)
- Rapid change in the high-technology market (particularly semiconductors, PCs, etc.)
- Fluctuations in currency 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 procurement of parts and components
- Changes in competitive relationships relating to collaborations, alliances and technical provisions
- Potential emergence of unprofitable projects

About Fujitsu

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting technologies, highly reliable computing and communications platforms, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE: 6702) reported consolidated revenues of 4.7 trillion yen (US$45 billion) for the fiscal year ended March 31, 2004.
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Company:Fujitsu Limited

Date: 29 July, 2004
City: Tokyo
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