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.
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.
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.