Converted into US dollars*, this represents approximately $8.7 billion. Higher domestic sales in telecommunications, as well as in information processing and services & software, were offset by lower overseas sales, particularly in the areas of telecommunications and information processing.
In line with problematic economic conditions affecting the worldwide IT industry – including worsening stagnation in the U.S. economy and attendant slowdowns in Japan and East Asia as well as weaker growth in Europe – the Fujitsu Group faced a very difficult business environment in the first quarter. Poor economic conditions led telecommunications carriers in the U.S. in particular, as well as companies in other fields and regions, to cut back on capital spending, and IT-related investment dropped off precipitously. Moreover, worldwide demand for consumer-use personal computers and cellular phones leveled off, leading to widespread adjustments in production and inventories.
In regard to earnings, higher sales of servers and other computing products countered sales declines in small form factor hard disk drives to improve overall results in information processing. However, electronic devices earnings were severely impacted by lower prices and a decline in demand as the market worked through excess inventory, and earnings for flash memory, logic ICs and SAW filters in particular suffered. Telecommunications earnings declined along with the drop in sales of optical transport systems in North America. As a result of these and other factors, Fujitsu reported a consolidated operating loss of 42.3 billion yen (US$339 million) for the quarter. In addition, due to charges associated with the reorganization of development operations in the U.S. and other restructuring measures, the company posted a net loss for the period of 55.4 billion yen (US$444 million).
First quarter consolidated sales of services & software were 374.9 billion yen (US$3.0 billion), an increase of 4% from the same period in fiscal 2000. Despite a solid increase in domestic sales of services, especially systems integration and outsourcing services for large corporations, overseas sales declined, dragged down by weaker sales of services in Europe and North America as companies there restrained spending on IT.
In information processing, consolidated sales totaled 325.3 billion yen (US$2.6 billion), an increase of 2% from the first quarter of last fiscal year. Although sales in Japan of personal computers to consumers declined, overall domestic information processing sales increased, boosted by continuing growth in sales of UNIX servers for businesses and higher sales of other large-scale enterprise servers. Overseas sales decreased, as sales of small form factor magnetic disk drives for desktop personal computers declined, and cutbacks in IT spending led to sluggish demand for servers, particularly in the U.S.
Consolidated telecommunications sales for the quarter were flat at 149.3 billion yen (US$1.2 billion). Higher sales of switching systems and base station systems for IMT-2000, the next-generation mobile communications system in Japan, were offset by lower sales of optical transmission systems, reflecting the impact of more severe cutbacks in investment by telecommunications carriers, particularly those based in North America.
Consolidated sales of electronic devices fell 4% to 159.8 billion yen (US$1.3 billion). A slowdown in the growth of global demand for cellular phones and digital audiovisual appliances brought about global-scale inventory adjustments in semiconductors. As a result, sales of SAW filters and other devices declined, while flash memory and logic IC sales remained on par with those in the same quarterly period last fiscal year.
