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Fujitsu records $1.78 b. loss, stuns market

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CIOL Bureau
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TOKYO: Japanese computer and electronics conglomerate Fujitsu Ltd. stunned

the market on Friday with a forecast of a 220 billion yen ($1.78 billion) net

loss for this business year, but promised a sweeping restructuring.

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The news spurred a drop in the company's shares to their lowest in

four-and-a-half years, but analysts took a positive view that the company was

facing up to the reality of the recent information technology slump and taking

steps to reform.

Fujitsu said it would take a 280 billion yen special loss for the first half

of the business year to next March as part of a group-wide restructuring that

could include thousands of job cuts. "I think this is positive. They were

very bold in issuing their new operating profit forecast," said Credit

Suisse First Boston analyst Noriya Nishi. "The 280 billion yen charge means

that they have decided on some deep cuts."

Fujitsu, which reported earnings on a quarterly basis for the first time,

also posted a 42.3 billion yen operating loss and a 55.4 billion yen

consolidated net loss for the April-June quarter, on sales of 1.09 trillion yen.

The company also cut its consolidated operating profit target for the full

business year to next March to 80.0 billion yen from a 270 billion yen forecast

issued in April.

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After the announcement Fujitsu's shares tumbled to 1,035 yen, down nearly 10

per cent on the day and their lowest since December 1996. They quickly pared

losses, however, ending the session down 3.58 per cent at 1,104 yen.

"The stock is down from the shock right now but I think it will go up on

Monday," said CSFB's Nishi.

Analysts said Fujitsu's original forecasts were too rosy, given this year's

sharp downturn in demand for personal computers, cell phones and other

information-technology goods. Many had recently cut full-year operating profit

targets for the company to the 130 billion to 170 billion yen range.

Fujitsu, the world's third-largest maker of flash memory chips used in cell

phones and consumer electronics, also said on Friday it would pare back an

ambitious plan to expand flash production capacity this business year. Flash

memory prices have tumbled in recent months as growth in cell phone demand

ground to a halt.

(C) Reuters Limited 2001.

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