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Fujitsu Reports Fiscal 2007 Third-Quarter Financial Results

- Operating income rises sixfold on higher operating leverage -

Fujitsu Limited

Tokyo, January 31, 2008

Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated operating income of 46.6 billion yen (US$417 million) for the third quarter of fiscal 2007 (October 1, 2007 – December 31, 2007), a sixfold increase of 39.5 billion yen over the same period of fiscal 2006.

All three of the Fujitsu Group's business segments posted higher operating income, lifting operating margin to 3.6%, a record for the third quarter. The increase in income was the result of higher operating leverage as well as greater cost efficiencies. Consolidated net income totaled 5.5 billion yen (US$49 million), increasing by five times over the same period in fiscal 2006.

Consolidated net sales totaled 1,294.9 billion yen (US$11,562 million*), an increase of 8.1% over the third quarter of fiscal 2006. The increase in sales was broadly based, with each of Fujitsu’s three business segments reporting year-on-year sales gains of at least 6%, resulting in the company's best third-quarter sales performance since it began releasing quarterly results in 2001. Sales in Japan increased by 9.7%, while sales outside Japan rose 5.6%. Services sales remained strong, rising 8.0%, and PC/mobile phone sales grew 19.4%.

The company posted a gain of 2.4 billion yen from the sale of shares in affiliates and a valuation loss of 19.8 billion yen, primarily as a result of the steep decline in the market value of listed securities.

For the first nine months of the fiscal year, the Group recorded consolidated net sales of 3,808.0 billion yen (US$34,000 million), operating income of 90.5 billion yen (US$809 million), and a net loss of 3.8 billion yen (US$34 million).

Business Segment Results

Consolidated third-quarter net sales in the Technology Solutions segment, which includes the System Platforms and Services sub-segments, rose 6.8%, to 765.7 billion yen (US$6,837 million). Sales in Japan increased by 5.4% on higher sales of system integration and outsourcing services. Sales outside of Japan increased by 9.2% due to the expansion of Services business capabilities through European acquisitions, along with increased sales of servers. Operating income for the segment was 34.2 billion yen (US$306 million), up 19.6 billion yen over the previous year as a result of higher operating leverage and improved cost efficiencies in the server and Services businesses.

Net sales in the Ubiquitous Product Solutions segment, which includes PCs, mobile phones, hard disk drives (HDDs) and other products, were 305.4 billion yen (US$2,728 million), an increase of 11.7% over the same period last year. Sales in Japan posted double-digit growth, rising by 17.0% on higher sales of PCs and other products. Sales outside Japan increased by 4.1% on higher sales of notebook PCs, mainly in Asia. Operating income for the segment was 13.4 billion yen (US$121 million), a sharp increase of 12.3 billion yen over the comparable period last year. Contributing to the income growth were higher operating leverage in PC operations, efforts to cut component costs, and an improvement in the company's HDD business, which returned to profitability as declines in unit prices eased.

Net sales in the Device Solutions segment increased 8.3%, to 203.0 billion yen (US$1,813 million). Sales in Japan rose by 16.6%, driven by higher sales of 90nm advanced LSI devices. Sales outside of Japan declined by 4.6%, primarily reflecting the realignment in the sales organization for Flash memory products used in mobile phones. Operating income for the segment rose sharply, to 9.4 billion yen (US$84 million), an increase of 8.9 billion yen over the third quarter of fiscal 2006. Higher operating leverage in advanced logic devices resulted in sharply higher profitability.

Fiscal 2007 Full-Year Earnings Projections

Fujitsu has revised its fiscal 2007 full-year consolidated earnings forecast. The company has adjusted its projections for net sales downward by 50.0 billion yen because the yen appreciation is expected to reduce the yen value of sales outside of Japan. Projections for operating income have been revised upward by 5.0 billion yen, as higher profitability in PCs is expected to outpace lower profitability in such areas as electronic components and LSI devices.

Earlier this month, Fujitsu announced plans to reorganize its LSI device divisions into a wholly owned subsidiary in order to more sharply focus these operations for future growth. In conjunction with this move, which is scheduled to occur in March, the company expects to incur expenses of 10.0 billion yen to relocate existing operations and dispose of certain facilities. In light of these anticipated expenses and the share valuation loss incurred in the third quarter, Fujitsu has adjusted its full-year projections for net income downward by 25.0 billion yen. The company's revised earnings projections are presented below:

(Billion Yen)
FY 2006
(Actual Results)
FY 2007
Change Since
Net Sales 5,100.1 5,350.0 -50.0
Operating Income 182.0 200.0 5.0
Net Income 102.4 40.0 -25.0

Complete information on Fujitsu's third quarter fiscal 2007 financial results, including financial tables, explanation of results and supplementary information, may be found at:

* All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 112 yen, the approximate closing exchange rate on December 31, 2007.

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

- Potential emergence of unprofitable projects

- Changes in accounting policies

About Fujitsu

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that create infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.1 trillion yen (US$43.2 billion) for the fiscal year ended March 31, 2007. For more information, please see:

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Company:Fujitsu Limited

Company and product names referenced herein are trademarks or registered trademarks of their respective owners. Information provided in this press release is accurate at time of publication and is subject to change without advance notice.

Date: 31 January, 2008
City: Tokyo
Company: Fujitsu Limited, , , , ,