The Japanese outfit now admits it is unlikely to generate the JPY 300bn ($2.78bn) in operating profits for the year ending March 2007 it had previously forecast. It blamed falling prices of LCD flat panels, as well as low profit margins in its software and services division, for the reduction.

In a media presentation, Fujitsu President Hiroaki Kurokawa apologized for missing last year’s fiscal targets for the 12 months ending March 31, 2005.

At the beginning of fiscal 2004 I announced consolidated earnings targets of JPY 4.95 trillion ($45.93bn) in net sales, JPY 200bn ($1.85bn) in operating income, and JPY 70bn ($650m) in net income, and we strove to achieve those targets, he said. Unfortunately, however, we fell short in each of these objectives, and for that I must express my sincere regret.

The primary factors behind our inability to reach these targets were an increase in risk associated with certain previously obtained projects in the Solutions/Systems Integration sector and a demand shortfall in the display business within our Electronic Devices segment, both of which significantly exceeded our forecasts at the beginning of the fiscal year, he said.

For the full year ending March 31, 2005, Fujitsu had reported a sharp 35.8% fall in net profit to JPY 31.9bn ($300m) on revenue that fell 0.1% to JPY 4.76 trillion ($44.8bn).

The Tokyo, Japan-based outfit has been restructuring its operations in order to cut losses. In February, it sold its liquid crystal display (LCD) operations for an undisclosed amount to Sharp, as the pricing squeeze on thin panels forced it to offload the manufacturing operation.

The deal effective marked Fujitsu’s exit from the volatile display market, as it had also sold its 30.1% stake in the PDP (plasma display panel) operation to its venture partner Hitachi.

The other troublesome area is its software and services division, which has been plagued by weak margins. The company blamed unprofitable projects in its system integration business last year.

Looking forward to the current year ending March 31, 2006, Fujitsu forecast a 1.8% rise in sales to JPY 4.85 trillion ($45bn), a 9% increase in operating profits to JPY 175bn ($1.62bn), and a 57% jump in net profits to JPY 50bn ($463m).