TOKYO (Reuters) - Japan's Fujitsu Ltd reported a 40 percent fall in quarterly profit on Monday, hurt by restructuring in its microchip operations, but it forecast that its annual profit would more than double this year on its IT outsourcing operations.
By Mayumi Negishi
TOKYO (Reuters) - Japan's Fujitsu Ltd reported a 40 percent fall in quarterly profit on Monday, hurt by restructuring in its microchip operations, but it forecast that its annual profit would more than double this year on its IT outsourcing operations.
Fujitsu, which competes with International Business Machines Corp and Electronic Data Systems Corp in IT services, aims to grow its consulting business overseas even as it remains shackled by its loss-making system chips and hard disk drives.
The company, which also makes computers and mobile phones, said it expected its net profit to rise to 100 billion yen ($967.3 million) in the year that started in April, up from 48.1 billion yen in the year ended in March and beating a mean estimate of 88.36 billion yen by 13 analysts polled by Reuters.
!ADVERTISEMENT!It expects gains in IT outsourcing and its consulting business to outweigh the effects of a strong yen, which it thinks will drag down its profit by 20 billion yen, and additional pension-related costs.
"At the moment, we see no signs that companies are cutting back on IT spending, which they see as necessary to cut costs or meet compliance or risk-management requirements," Fujitsu CFO Masamichi Ogura told a news conference.
Fujitsu's hard drive and system chip operations will swing to an annual profit of several billion yen each from a loss of several billion yen in the year ended March 31, he said.
Fujitsu said spending in its device solution segment, which includes its microchips, would fall 36 percent to 75 billion yen. Total capital spending will amount to 240 billion yen this year, down 4 percent, it said.
It plans to raise its production of hard drives this year by 27 percent to 47 million units, even as it expects price falls of a few percent, Ogura said.
Shares of Fujitsu hit a three-year low in March after a system glitch at client Tokyo Stock Exchange dented confidence in Fujitsu's systems.
The company named the head of its overseas software services business Kuniaki Nozoe as its new president in April. But the announcement has not helped its shares, which have been weighed down since the resignation of its microchip unit head and its postponed results announcement due to delays in getting auditors' approval.
In January-March, Fujitsu posted a net profit of 51.9 billion yen against a profit of 86.4 billion yen for the same period a year earlier. It was hit hard in the quarter as it posted appraisal losses on its securities holdings and wrote down the value of some of its microchip-making equipment.
Its quarterly sales fell 1.1 percent to 1.52 trillion yen.
Prior to the announcement, shares of Fujitsu closed up 1.9 percent at 683 yen, against a 1.3 percent rise in the Tokyo stock market's electrical machinery subindex IELEC.
($1=103.38 Yen)
(Reporting by Mayumi Negishi; Editing by Hugh Lawson)
