Fujitsu 2008 Annual Report Download - page 40

FISCAL 2007 BUSINESS RESULTS
nMarket Trends
The value of Japan’s IT services market in 2007 increased 3.8% to US$43.00 billion. IT
investment increased in a wide array of industry sectors, reflecting major bank merg-
ers, moves by insurance and securities firms to enhance compliance, and system
upgrades for the local government sector. By service type, in addition to system inte-
gration demand, customers are now relying more heavily on outsourcing. Accord-
ingly, many firms opted to outsource system operations and non-core operations,
such as data center-style outsourcing and business process outsourcing, during the
year under review.
The global market for IT services grew 6.5% in 2007 year on year to US$513.64
billion. There was growing concern of a slowdown in investment in the North American
and European financial sectors due to market turmoil caused by the subprime mort-
gage crisis. A double-digit increase in demand in newly emerging economies, however,
spearheaded overall growth in the IT services market outside Japan. The method for the
delivery of services also diversified, as the “Software as a Service” (SaaS) model—whereby
networks serve as vehicles for service provision— began to gain traction, especially in
North America.
nOperational Review
Sales from the Services sub-segment (Solutions/SI, Infrastructure Services) rose 4.3%
over the previous fiscal year to ¥2,559.3 billion.
Solutions/SI: Sales increased 15.4% to ¥1,258.8 billion. Excluding the effects of busi-
ness transfers accompanying internal organizational changes carried out in fiscal 2007,
sales increased by 4.2%. In Japan, our system integration business expanded in a wide
range of fields, most notably in the financial and healthcare sectors. Consulting func-
tions and infrastructure construction SE were integrated into the business at consoli-
dated subsidiaries to enhance business efficiency. Outside Japan, progress was made in
strengthening the business structure, thanks to acquisitions in the US, Canada and
New Zealand.
Infrastructure Services: Sales increased 4.3% to ¥1,215.2 billion. Demand for out-
sourcing services grew strongly on a global basis. In Japan, we constructed city-center
data centers in order to respond effectively to spiking outsourcing demand. Outside
Japan, following similar actions in Germany in the previous fiscal year, we made aggres-
sive acquisitions in Scandinavia and other areas. As a result, we attracted new customers
in Germany and Sweden as well as orders for large projects in Europe.
Operating income declined 10.0% year on year to ¥140.4 billion. Excluding the effect
of changes in accounting policies, income decreased by ¥10.6 billion for the year. In
Japan, increased expenses stemming from efforts to standardize and automate IT infra-
structure and the construction of data centers were effectively absorbed by benefits
from higher sales and higher cost efficiencies, leading to income growth. This was offset,
however, by lower income outside Japan. Despite benefits from sales growth mainly in
European markets, income declined due largely to the booking of a provision for losses
for an unprofitable project in the UK.
(Years ended March 31)
SUBSEGMENT SALES*
Solutions/SI
Infrastructure Services
* Including intersegment sales
Others
(Billions of Yen)
OPERATING INCOME/
OPERATING INCOME MARGIN
(Billions of Yen) (%)
Operating income (left scale)
Operating income margin (right scale)
(Years ended March 31)
(Years ended March 31)
CAPITAL EXPENDITURE, RATIO OF
R&D EXPENDITURE TO NET SALES
(Billions of Yen) (%)
Capital expenditure (left scale)
Ratio of R&D expenditure to net sales
(right scale)
* For entire Technology Solutions segment
2004 2005 2006 2007 2008
0
1,000
2,000
3,000
232.3 221.5 208.5 197.3 85.2
938.0 976.1 1,037.2 1,164.8 1,215.2
1,029.0 1,002.6 1,020.4 1,091.0 1,258.8
2,199.4 2,200.4 2,266.2 2,453.2 2,559.3
2004 2005 2006 2007 2008
0
80
40
120
160
0
6
3
9
12
113.5
86.6
128.4
156.1
140.4
5.2
3.9
5.7 6.4
5.5
2006 2007 2008
0
40
20
60
100
80
0
4
2
6
8
10
93.1 91.3
81.6
4.4 4.1 4.1
038
ANNUAL REPORT 2008FUJITSU LIMITED
TECHNOLOGY SOLUTIONS/SERVICES