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Fujitsu cuts outlook as Q3 operating profit falls 37%

Fujitsu cuts outlook as Q3 operating profit falls 37%
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First Published: Fri, Jan 28 2011. 01 15 PM IST
Updated: Fri, Jan 28 2011. 01 15 PM IST
Tokyo: Fujitsu Ltd, Japan’s largest IT services vendor, reported a 37% fall in quarterly operating profit on slow IT business and cut its annual outlook further.
Rival International Business Machines Corp earlier this month reported a 9% rise in fourth-quarter net profit, indicating a gap in the recovery between the US and Japanese IT service industries.
IBM’s stronger-than-expected results raised optimism that global companies were confident enough to spend more on technology, while in Japan Fujitsu’s results indicate the industry outlook is expected to remain dim.
Fujitsu said its October-December operating profit was ¥21.3 billion ($257 million), against ¥33.6 billion a year earlier. That was below a consensus estimate for a ¥27 billion profit in a poll of four analysts by Thomson Reuters I/B/E/S.
Fujitsu, which ranks third in the global IT services sector behind IBM and Hewlett-Packard, said it now expects to report a ¥145 billion operating profit for the full year ending March, against its earlier forecast of ¥185 billion.
Japan’s NEC Corp, one of Fujitsu’s main rivals, reported a ¥13.5 billion operating loss on Thursday on the slow recovery of corporate investments in IT services. Price competition also eroded earnings, NEC said.
Fujitsu’s domestic competitors also include Hitachi Ltd.
Fujitsu shares closed down 2.5% on Friday, against a 1.0% drop in the sector index. The results were announced after the market close.
The shares fell 5% last year, underperforming a 4% gain in the industry index.
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First Published: Fri, Jan 28 2011. 01 15 PM IST
More Topics: Company results | Fujitsu | IT | Profit | IBM |