Fujitsu Ltd. plans to increase sales in computer services to make up for declining hardware demand.
The company, Japan’s leader in computer services, is expanding the business in Europe and North America and plans to boost sales of services including cloud computing to corporate customers, Chief Financial Officer Kazuhiko Kato said in a recent interview. Fujitsu may acquire a company to accelerate growth, he said, declining to name potential targets.
“We should spend time building our revenue base,” the 61-year-old executive said at Fujitsu’s headquarters in Tokyo. “It will take time to boost revenue in the services field, but that will become a buffer for times when hardware sales are falling.”
Fujitsu is forecasting a third straight year of declining profit as the worsening European economy dents demand for its computers and services, including system integration and cloud computing. A shortfall of about ¥100 billion at the company’s U.K. pension fund will reduce free cash flow this fiscal year, he said.
“Targeting companies rather than consumers is a good bet to spur sales,” Mitsuo Shimizu, an analyst at Iwai Cosmo Holdings Inc., said of Fujitsu’s strategy. Corporate demand for computing services is growing, he said.
Fujitsu may release a new medium-term business plan before April, Kato said.
The company cut its profit forecast 58 percent to ¥25 billion for the year ending March 31 as it struggles to spur overseas sales because of a worsening economy in Europe, it said Oct. 31. Sales may total ¥4.42 trillion, or 2.4 percent less than the previous estimate, the company said.
Panasonic Corp., Renesas Electronics Corp. and Fujitsu are suffering from plunging demand for system LSI chips used in televisions. LSI chips pack memory, microprocessing and other functions, such as processing graphics, into a single component.
Global TV demand fell 8 percent from a year earlier in the second quarter of this year, according to DisplaySearch, led by a 77 percent plunge in shipments in Japan.
Panasonic’s President Kazuhiro Tsuga said in July the company may consider merging its LSI business with those of Fujitsu and Renesas. Kato declined to comment on the plan.
Fujitsu will shut a plant assembling system chips and sell two factories to J-Devices Corp., the two companies said Aug. 31.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.