Fujitsu 2009 Annual Report Download - page 81

our goal of annual sales of 500,000 units of x86 servers worldwide in
the fiscal year ending March 31, 2011. In this way, we aim to rein-
force our base for supporting the global development of the IT
services business.
In Japan, we made a decision in May 2009 to conduct a share
exchange that will make Fujitsu Business Systems a wholly owned
subsidiary and signed an agreement to this effect. This move is
intended to enhance our technology solutions for the medium-
sized business market. We intend to concentrate the Group’s
resources for this market in Fujitsu Business Systems, which we will
position as a pivotal Group company responsible for everything
from service and product planning, to development, sales and
operations for medium-sized corporate customers.
Ubiquitous Product Solutions
Sales in this segment in fiscal 2008 were ¥949.1 billion ($9,685 million),
down 20.2% from fiscal 2007. Sales in Japan fell 13.5% due to intensi-
fying cost competition in PCs and slumping sales to the corporate
sector, along with the lengthening replacement cycle for mobile
phones. Sales outside of Japan decreased 32.1%, or 24% excluding
currency exchange rate effects. Sales were negatively impacted by
fiercer competition in HDDs, coupled with lackluster PC sales, primar-
ily in Europe, due to adverse market price conditions.
Segment operating income was ¥0.5 billion ($6 million), ¥52.0
billion lower than the previous fiscal year. In addition to lower mobile
phone sales and increased costs associated with more sophisticated
functionality, earnings fell on a drop in PC prices and sales volumes,
despite benefits from lower costs for PC components. Meanwhile in
HDDs, losses grew due to increasing global competition in HDDs for
notebook PCs and servers, and production cutbacks in HDD heads.
In April 2009, Fujitsu signed agreements finalizing the transfer
of the hard disk drive business and HDD media business, both cur-
rently operations within its HDD business, to Toshiba Corporation
and Showa Denko K.K., respectively. The drive business is scheduled
to be transferred on August 1, 2009, and the HDD media business is
to be transferred on July 1, 2009. Ahead of this change, the Com-
pany’s HDD head business was terminated before the close of fiscal
2008. While most employees in the hard disk drive and HDD media
businesses will be transferred to the respective companies receiv-
ing these operations, employees concentrated in the HDD head
2. Segment Information
Net Sales and Operating Income by Business Segment
Information on consolidated sales (including intersegment sales)
and operating income by business segment is presented below.
Technology Solutions
Sales in this segment in fiscal 2008 amounted to ¥3,077.0 billion
($31,399 million), down 6.0% from fiscal 2007. Sales in Japan were up
1.2% thanks to growth in our SI business, as well as increased sales of
IP routers to carriers. Sales outside of Japan fell 18.8%, but were
roughly unchanged from last year if exchange rate effects are
excluded. Although sales of UNIX servers declined, we recorded
growth in the Services business targeting continental Europe.
Operating income for the segment rose ¥8.5 billion year on year
to ¥188.7 billion ($1,926 million). Operating income in Technology
Solutions increased overall due to the recognition of losses from an
unprofitable project in the Services business in the UK in the previ-
ous fiscal year, plus the benefit of higher sales in SI business in Japan,
and improved cost efficiency. These positive factors outweighed the
impact of lower UNIX server sales, initial costs accompanying private
sector-oriented business expansion in the Services business in
Europe, and the adverse impact of currency exchange rates.
The Group continues to proactively develop its Technology
Solutions business, with the goal of upgrading and enhancing the
capacity to provide services on a global scale. In fiscal 2008, we
reviewed our structure in North America, integrating three compa-
nies—Fujitsu Consulting, Fujitsu Computer Systems, and Fujitsu
Transaction Solutions—as subsidiaries under newly established
Fujitsu North America Holdings (in April 2009, the three aforemen-
tioned companies were merged, and the name of the company was
changed to Fujitsu America). In addition to this realignment, we
reached an agreement with Australian telecom Telstra Corporation
Limited to acquire all shares in its subsidiary, IT services firm KAZ
Group Pty Ltd. In April 2009, we acquired shares in Fujitsu Siemens
Computers from Siemens AG of Germany, which held a 50% stake in
the company, converting it into a wholly owned subsidiary and
changing the company’s name to Fujitsu Technology Solutions.
With Fujitsu Technology Solutions as a spearhead, we will move
forward with reconfiguring the company’s global sales framework,
and enhancing development and production efficiency, to achieve
FACTS & FIGURES Management’s Discussion and Analysis of Operations
079
ANNUAL REPORT 2009
FUJITSU LIMITED