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JAPANESE VENDORS

  Analysis of Fujitsu's FY97 Financial Results

Revenues Up, Profits Down

Fujitsu's Amdahl Takeover Signals Greater International Role

A leading Japanese computer maker, Fujitsu Ltd., reported a 20% (yen-denominated) revenue growth to $37 billion in its fiscal year which ended March 31. But its (yen-denominated) net earnings dropped by 27% to $380 million during the same period. Fujitsu's results in U.S. dollars are worse. Revenues were up by only 8%, while its net profits were down by 34%. At a 1% skinny net margin, Fujitsu is starting to look more like a Japanese bank, than a top computer company.

Despite Fujitsu's reputation as Japan's premier computer company, the rising star of its corporate performance continues to be the telecommunications division. In FY 97, this unit reported a 37% surge in yen-denominated revenues; up 24% when translated into the U.S. dollars.

Although more than three times bigger, Fujitsu's computer systems division recorded only about a 10% growth during the same period.

This was a stellar performance, however, by comparison to a 14% drop in the company's semiconductor business revenues, brought about by a steep drop in OEM chip prices during most of 1996.

The same chip pricing phenomenon led to a decline in Fujitsu's gross margins of almost four points (from 34% to 30%). At the 30% level, Fujitsu's gross margins are lower than they have ever been in its recent corporate history. Add to it a 69% decrease in equity of affiliates' earnings (Amdahl) due to its special charges, and you will begin to understand why Fujitsu took over Amdahl earlier this month.

As of September 12, the date Fujitsu's takeover offer expired, the Japanese company had acquired a total of 95% of Amdahl's stock. Which ought to put a sock into the mouths of all those Wall Street analysts who thought that Amdahl was worth much more than $12.40 per share which Fujitsu ultimately offered.

PC Market

Perhaps the most interesting part of Fujitsu's just-released English-language 1997 Annual Report was its PC business. Having entered the U.S. market in February 1996, and the U.K. market in July 1996, Fujitsu has clearly staked out a lofty goal for its worldwide PC shipments - the No. 3 position in the world by the year 2000! (As of FY97, Fujitsu was only No. 8).

In its FY97, Fujitsu shipped about two million PCs in Japan, claiming about a 27% market share in a 7.5 million PCs per year Japanese market. This left about 800,000 PC shipments in the U.S. and European markets - only a trickle by the standards of the leading PC vendors, but a formidable start for a partial first year of shipments.

Happy bargain hunting!

Bob Djurdjevic

Additional Charts:

  • Fujitsu employment, including subsidiaries
  • Fujitsu/IBM employment comparisons (1985-1997)
  • Fujitsu's 1997 IT revenues
  • Fujitsu's 1997 international business segments
  • Fujitsu's 1997 business segments

Tables:

  • Fujitsu's income statements (1994-1997)
  • Fujitsu's balance sheet analysis (1990-1997)
  • Fujitsu's international business segments (1994-1997)

For more information, please call us at: 602/824-8111








Volume XIII, No. 97-36
September 19, 1997

Editor: Bob Djurdjevic
Published by Annex Research;
e-mail: annex@djurdjevic.com

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