Fu­jitsu to ex­pand ser­vices sales amid lower hard­ware de­mand

The Pak Banker - - Front Page -

TOKYO

Fu­jitsu Ltd. (6702), Ja­pan's big­gest provider of com­puter ser­vices, plans to in­crease sales at the busi­ness to make up for de­clin­ing hard­ware de­mand.

The com­pany is ex­pand­ing the busi­ness in Europe and North Amer­ica and plans to boost sales of ser­vices in­clud­ing cloud com­put­ing to cor­po­rate cus­tomers, Chief Fi­nan­cial Of­fi­cer Kazuhiko Kato said in an in­ter­view. Fu­jitsu may ac­quire a com­pany to ac­cel­er­ate growth, he said, de­clin­ing to name po­ten­tial tar­gets.

"We should spend time build­ing our rev­enue base," the 61- year-old ex­ec­u­tive said at Fu­jitsu's head­quar­ters in Tokyo on Nov. 16. "It will take time to boost rev­enue in the ser­vices field, but that will be­come a buf­fer for times when hard­ware sales are fall­ing."

Fu­jitsu is fore­cast­ing a third straight year of de­clin­ing profit as a wors­en­ing Euro­pean econ­omy dents de­mand for its com­put­ers and ser­vices in­clud­ing sys­tem in­te­gra­tion and cloud com­put­ing. A short­fall of about 100 bil­lion yen ($1.2 bil­lion) at the com­pany's U.K. pen­sion fund will re­duce free cash flow this fis­cal year, he said.

"Tar­get­ing com­pa­nies rather than con­sumers is a good bet to spur sales," Mit­suo Shimizu, a Tokyo-based an­a­lyst at Iwai Cosmo Hold­ings Inc. (8707), said of Fu­jitsu's strat­egy. Cor­po­rate de­mand for com­put­ing ser­vices is grow­ing, he said.

Fu­jitsu may re­lease a new medium-term busi­ness plan be­fore April, Kato said.

The com­pany cut its profit fore­cast 58 per­cent to 25 bil­lion yen for the year end­ing March 31 as it strug­gles to spur over­seas sales be­cause of a wors­en­ing econ­omy in Europe, it said Oct. 31. Sales may to­tal 4.42 tril­lion yen, or 2.4 per­cent less than the pre­vi­ous es­ti­mate, the com­pany said.

Fu­jitsu rose 2.4 per­cent to 301 yen as of 10:22 a.m. in Tokyo trad­ing. Ja­pan's bench­mark Nikkei 225 Stock Av­er­age gained 1.4 per­cent.

Pana­sonic Corp. (6752), Re­ne­sas Elec­tron­ics Corp. (6723) and Fu­jitsu are suf­fer­ing from plung­ing de­mand for sys­tem LSI chips used in tele­vi­sions. LSI chips pack mem­ory, mi­cro­pro­cess­ing and other func­tions, such as pro­cess­ing graph­ics, into a sin­gle com­po­nent.

Global TV de­mand fell 8 per­cent from a year ear­lier in the sec­ond quar­ter of this year, ac­cord­ing to Dis­playSearch, led by a 77 per­cent plunge in ship­ments in Ja­pan.

Pana­sonic's Pres­i­dent Kazuhiro Tsuga said in July the com­pany may con­sider merg­ing its LSI busi­ness with Fu­jitsu's and Re­ne­sas's. Kato de­clined to com­ment on the plan.

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