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Fujitsu hopes cost cuts will aid return to profit

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CIOL Bureau
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TOKYO: Fujitsu Ltd., Japan's largest computer maker, said on Tuesday

restructuring measures would likely save the company 140 billion yen ($1.05

billion) in the next business year, helping it return to a profit.

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Company spokesman Robert Pomeroy said although Fujitsu has not compiled its

official earnings forecasts for the next financial year starting on April 1, the

aggressive cost cutting would likely buoy its bottom line.

"It would certainly help us to return back to profitability," he

said. Fujitsu, which expects a group operating loss of 75 billion yen for this

business year ending on March 31, has been restructuring its operations, cutting

22,000 jobs.

Pomeroy declined, however, to confirm a report in the Nihon Keizai Shimbun

business daily on Tuesday that the company was expected to post a consolidated

operating profit of about 100 billion yen for the next business year.

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The daily said operating losses in the electronic devices division, which has

been hit hard by slumping demand and tumbling prices, would shrink to 20 billion

yen in 2002/03 from this year's 110 billion yen. It added that software and

services, increasingly the focus of Fujitsu's business, would see a rise in

operating profit to 170 billion yen from 145 billion yen.

Fujitsu has vowed to pull its struggling overseas computer software and

services operations into the black in the next business year after several years

of restructuring.

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Speaking of alliances...



Other divisions were also expected to see an improved earnings performance, the
daily said. Information processing, comprising computer hardware, was seen

boosting its operating profit to 20 billion yen from five billion, while the

struggling telecoms equipment division would return to break-even from a loss

this year of 50 billion yen.

Consolidated revenue for the next fiscal year is expected to rise two per

cent to 5.1 trillion yen, the paper said. The company plans to announce its

official earnings targets for the next business year in late April. Fujitsu's

shares drew modest strength from the report, ending the morning session up 1.77

per cent at 1,034 yen compared with the benchmark Nikkei average's gain of 1.25

per cent.

Shares in Fujitsu, like Japan's four other microchip and electronics

conglomerates, finally appear to be rebounding after a steep slide in late

January and early February, when the market fretted over mounting losses and

flagging global competitiveness.

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Fujitsu's shares have gained 45 per cent since hitting a nine-year low on

February 5. Fuelling the rebound in the sector was the improved prospects for

alliances, especially in the struggling chip business. Fujitsu, Japan's

fifth-largest chipmaker, said last week it was talking with Toshiba Corp, the

largest, about possible cooperation in semiconductors.

News has also leaked out in recent months that Fujitsu was in talks about

cooperation in computer software with IBM Corp and about a possible sale to Sony

Corp of Nifty, Japan's largest Internet service provider.

Although no formal announcements have emerged from those talks, the reports

stoked hopes that Fujitsu is sharpening its focus on computer software and

services, where it aims to emulate IBM's successful transformation into a

services company reaping more reliable profit margins.

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