Fujitsu Limited has faired little better than many of its Japanese compatriots this year, as a slump in chip sales and the global fall in memory prices eroded its profits. Japan’s biggest mainframe manufacturer and second largest supplier of personal computers saw net profits for the year to March 31 down 26.9% at the equivalent of $395.8m on revenues that rose 19.7% to $38.6bn. The biggest problems occurred in sales of electronic devices, which includes the revenue from memory chips. Sales were down a massive 17% (a fall of around $503m) and in the short term, memory prices are forecast to fall further, bringing little chance of a quick turnaround. But sales of application specific integrated circuits, or ASIC’s, experienced strong growth, shielding poor chip sales in other areas such as memory. Outside of semiconductors, things are looking good, and as with NEC Corp’s results last week, demand for all forms of telecommunications equipment was strong. In particular, mobile phone equipment together with sales of digital and fiber optic transmission systems contributed to a 37% rise in revenues to $6.2bn this year. But the very heart of Fujitsu’s results are the sales from information processing devices (personal computers and mainframes) which account for nearly half of group sales. Here revenues were up 22% to $18.2bn helped by a 95% increase in sales to overseas markets. For 1998, Fujitsu is forecasting itself a 19% rise in sales and a 485% rise in net profits, but the market is taking this with a very large pinch of salt.
Toshiba more realistic
At Toshiba Corp (and its 303 consolidated subsidiaries) there was a similar tale to tell. Growth in sales of telecommunications equipment and personal computers has been dragged down by poor margins on semiconductor devices. Group net profits for the year to March 31 were down 25.8% at the equivalent of $575.3m on revenues that rose 6.5% to $46.8bn. Sales of power generation systems and related equipment were down while consumer products remained flat. Toshiba is also giving out predictions for 1998, pitching its sales at $51bn, up 10% with net profits of $640m, up 12%. Analysts view these estimates as more realistic than Fujitsu’s and maybe even slightly pessimistic. Tuesday’s closing price on the NY foreign exchange market of 116.6 Yen to the Dollar has been used throughout.