SYSTEMS

TOKYO, JAPAN -- Fujitsu Limited, a global leader in Internet-based information technology solutions, today reported consolidated net sales of 2,387.7 billion yen (US$20,065 million) for the first half of Fiscal Year 2001 (April 1 - September 30, 2001), a decline of 4% over the same period in fiscal 2000. Facing an increasingly difficult business environment, as the impact of the U.S. economic slowdown spread to Japan, Asia and Europe and heightened concern of a global economic slowdown, Fujitsu's first-half financial results were impacted by cutbacks in IT-related corporate spending, particularly in the U.S., and sluggish global demand for personal computers and mobile phones. As a result, production and inventory adjustments in IT-related fields continued to spread, and there was a rapid deterioration in the market for electronic devices. Fujitsu recorded a consolidated operating loss of 59.1 billion yen (US$497 million) for the half-year period, compared with an operating profit of 100.2 billion yen in first-half fiscal 2000. While operating income was boosted to some extent by higher domestic sales of services, large-scale servers, and switching and base station systems for IMT-2000 third-generation mobile communications in Japan, these advances were offset by the combination of weak demand and lower prices for small form factor magnetic disk drives. Moreover, further deterioration in the financial condition of overseas telecommunications carriers, particularly in North America, led to sharply lower demand and price erosion in optical transmission systems. The market for electronic devices also rapidly worsened as a result of weak demand and further price erosion. These factors, coupled with inventory adjustments and lower capacity utilization, led to large operating losses in the telecommunications and electronic devices segments. In addition, Fujitsu took a charge to cover restructuring measures designed to effect a radical restoration of profitability. As a result, the company reported a consolidated first-half net loss of 174.7 billion yen (US$1,468 million) compared to net income of 17.2 billion yen in the previous corresponding period. Results by Business Segment Services & Software Consolidated first-half sales of services & software were 931.7 billion yen (US$7,830 million), an increase of 4% from the same period in fiscal 2000. There was steady growth in domestic sales of services, such as systems integration and outsourcing, as corporations and organizations in Japan actively implemented IT-driven restructuring initiatives. Although the low value of the yen raised the converted value of foreign subsidiaries' contributions to sales, corporate cutbacks in IT spending in the U.S. and Europe resulted in an overall sales decrease in Fujitsu's overseas services business. Information Processing In information processing, consolidated sales were 670.2 billion yen (US$5,632 million), down 7% from the corresponding period in the previous fiscal year. Domestic sales of large-scale enterprise servers increased, bolstered by vigorous IT spending by Japan's major corporations. Demand for PCs, however, remained sluggish worldwide, and domestic sales of PCs fell, particularly for the consumer market. As a result, overall domestic information processing sales declined. Overseas sales were also lower, led by a decline in sales of small form factor magnetic disk drives for PCs and lower demand for servers resulting from cutbacks in corporate IT spending, particularly in the U.S. Telecommunications Consolidated first-half telecommunications sales were 315.2 billion yen (US$2,648 million), a decrease of 7% from the same period in fiscal 2000. Higher sales of switching systems and base station systems for IMT-2000, the next-generation mobile communications system in Japan, were offset by lower sales of optical transport systems, reflecting the impact of further cutbacks in investment by telecommunications carriers, particularly those based in North America. Electronic Devices Consolidated sales of electronic devices fell 18% to 296.0 billion yen (US$2,488 million). Against the backdrop of sluggish demand for mobile phones and digital consumer appliances, there was a rapid and severe deterioration in the market for electronic devices. Sales of flash memory, logic ICs and SAW filters all declined, as did sales of compound semiconductors for optical transmission systems. For further information visit www.fujitsu.com