Fujitsu files gloomy H1 results

(By Tola Sargeant 10.00am 29th Oct 09) It is difficult to find much positive news in Fujitsu’s first half results this morning. The decline in revenues in the six months to Sept 30th is particularly striking: net sales were 10.9% down on the same period in FY08 to 2,186.6b yen (US$24.3b). The group made an operating loss of 18.2b yen (US$202m), compared with a 38.5b yen profit in H108, but income did improve reaching 43.2b yen ($480m) compared to 4.6b yen last year.

Wading through the detail of the numbers yields some clues as to how the new look Technology Solutions business is performing outside Japan. ‘Overseas Technology Solutions’ revenue declined by 6% to 540.8b yen (having adjusted for currency fluctuations and the impact of bringing Fujitsu Siemens Computers into the business). That’s pretty close to the 7% decline in Fujitsu’s UK revenues reported in FY08 (see Fujitsu announces major UK redundancy programme). Technology Solutions also saw profitability worsen – Q2 operating income for the segment was 37.6b yen (US$418m), 11.4b yen down on the same period last year.

Unsurprisingly, Fujitsu cites the recession, which it says has adversely impacted the IT services business, particularly in the US and Europe. But the fact that the Japanese firm is behind the curve with its cost cutting and redundancy programme hasn’t helped profitability – almost all its competitors went through this pain some 6-12 months ago while Fujitsu is still in the consultative process in the UK with redundancies due to be announced in November. And, unfortunately, we haven’t seen Fujitsu winning many new contracts in the UK recently – even the £430m Home Office deal was the restructuring/extension of an existing deal (see here).

But it’s the hardware side of Fujitsu’s business that is suffering most. Net sales in the Ubiquitous Product Solutions segment (which produces PCs, mobile phones, HDDs, optical modules) were down a staggering 28% in Q2 outside Japan while the Device Solutions business reported a 23.2% decline in sales overall in Q2. Could it be time for Fujitsu to follow in IBM’s footsteps and sell its PC business? If not, where are the netbooks, tablets and smartphones that could turn the business around?