Fujitsu Ltd is in something of a bind brought on by the crash in memory chip prices and a campaign to win personal computer market share at all costs: it’s won the share all right, but also the losses that go with it. Necessity knows no law, and Fujitsu needed to turn its eyes more to profits from market share, Naoki Sato, an analyst at Deutsche Morgan Grenfell told Reuters. The company has had to raise its prices on its low-end consumer personal computers, by $90 – the first rise since it launched its all-out offensive on the Japanese market two years ago – but then personal computer manufacturers aren’t expected ever to raise prices, although IBM Corp sometimes used to do it in the days when it thought it wrote all the rules. Analysts have been quick to interpret the price rise as an admission that the company is worried about profitability in the business, which is no longer shored up by profits in its chip business, where the memory chip price crash could wipe out the $1.18bn profit Fujitsu scored from its chips last year. Fujitsu officials said they were looking at the computer division, including mainframes and mid-range systems, software and networking products as well as personal computers, as a whole and not just focusing on personal computers. IDC Japan estimates Fujitsu’s 1995 market share in Japan’s 576m personal computer market at 18.4%, against 40.1% for NEC Corp. We expect sales to exceed 2m, probably reach the 2.1m mark in the current year to end-March 1997, Fujitsu said. The compuputer business makes up 70% of the company’s sales, and analysts expect the computer division to see profits in the second half of the current year so that for the year, it should see operating profits of $307m. Earlier, the Nippon Keizai Shimbun suggested that the company’s group net profit for the year to March 31, 1997 would fall by between 13% and 21% to around $500m. As well as poor performance at Fujitsu’s semiconductor subsidiaries, the paper highlighted the half-year net loss at Amdahl Corp in the US – Fujitsu has a 43% stake in Amdahl.
