Fujitsu 2012 Annual Report Download - page 100

Technology Solutions
The Technology Solutions segment delivers products, software, and
services to customers in an optimal, integrated package of compre-
hensive services. These consist of Solutions/Systems Integration,
which are services for the construction of information and communi-
cation systems, Infrastructure Services, which are primarily outsourc-
ing and maintenance services, System Products, which covers mainly
the servers and storage systems that comprise ICT platforms, and
Network Products, which are used to build communications infra-
structure, such as mobile phone base stations and optical transmis-
sion systems.
Consolidated segment net sales totaled ¥2,934.9 billion
($35,792 million), a year-on-year decline of 2.6%. Sales in Japan
decreased 1.5%. Server-related sales declined mainly due to the
impact from high-volume production in fiscal 2010 of dedicated
servers for Japan’s Next-Generation Supercomputer system. Revenue
from infrastructure services also fell as a result of the shift in the
network services’ ISP*1 business from packaged services that include
connection fees to stand-alone services. ICT investment is recovering
in the manufacturing, retail and health care sectors, but a decline in
business proposals for large-scale projects in the financial and public
sectors had an impact on performance. Although we anticipate a
full-scale recovery in domestic ICT investment from the second half of
the next fiscal year, Japanese mobile carriers are stepping up invest-
ment to handle the greater network traffic stemming from the wide-
spread adoption of smartphones, and sales rose for network products
such as mobile phone base stations. Sales outside Japan declined
4.6%, but on a constant currency basis were roughly on a par with
the prior fiscal year. Sales declined for UNIX servers to the US and
Europe, and growth was sluggish for optical transmission systems
and other network products as a result of curbs on investment by
North American carriers. However, revenue from infrastructure ser-
vices increased in such regions as Australia and Scandinavia.
Segment operating income amounted to ¥171.2 billion ($2,089
million), an increase of ¥8.4 billion compared to fiscal 2010. In
Japan, despite a boost from greater sales of mobile phone base
stations and cost reductions for PC servers, earnings declined mainly
as a result of a decrease in project proposals for large-scale systems
in the solutions/SI and server-related fields, and ongoing upfront
investments in cloud services. Outside Japan, despite a fall in sales of
UNIX servers, a revenue drop for optical transmission systems, and
an increase in upfront development spending, earnings rose on
gradually improving profitability in the services business in Europe.
*1 Internet Service Provider business. This refers to the provision of value-added
services in the domain of services supporting safe, secure and trouble-free
internet usage, and includes the provision of Internet connectivity services,
security, and troubleshooting support via phone or onsite visits.
Ubiquitous Solutions
The Ubiquitous Solutions segment contains ubiquitous terminals or
sensors-including personal computers and mobile phones, as well as
car audio and navigation systems, mobile communication equip-
ment, and automotive electronic equipment that collect and utilize
various information and knowledge generated from the behavioral
patterns of people and organizations needed to achieve the Group’s
vision of a “Human Centric Intelligent Society” (a society that enjoys
the benefits of the value generated by ICT without requiring anyone
to be conscious of the technological complexities involved).
Net sales in this segment totaled ¥1,154.2 billion ($14,077
million), an increase of 2.5% from the previous fiscal year. Sales in
Japan increased 3.9%. PC sales, despite business deals with corpora-
tions for bulk purchases, were on the whole unchanged from the prior
year due to falling retail prices in the consumer market, and difficul-
ties procuring HDDs as a result of the flooding in Thailand. Mobile
phone sales rose on the boost from the merger with Toshiba Corpora-
tion’s mobile phone business, and expansion of the smartphone
market. Sales of mobilewear sub-segment’s car audio and navigation
systems decreased, mainly as a result of the suspension of automo-
bile manufacturing due to the Great East Japan Earthquake and the
flooding in Thailand. Sales outside Japan declined 1.7%, but rose
3.0% on a constant currency basis. Mobilewear device sales declined
as a result of the suspension of automobile production overseas,
while PC unit sales increased, centered on Europe.
Segment operating income amounted to ¥19.9 billion ($243
million), a decrease of ¥2.7 billion compared to fiscal 2010. In Japan,
in response to falling retail prices for PCs and rising procurement costs
for HDDs, the Company took steps to utilize the strong yen to lower
procurement costs. In mobile phones, while the rise in sales boosted
earnings, the Company stepped up investment in smartphone devel-
opment. The decline in mobilewear sales had an impact on perfor-
mance, and overall earnings were roughly on a par with the previous
fiscal year. Outside Japan, earnings were affected by rising procure-
ment costs for PC HDDs, and the revenue decline in mobilewear.
The earthquake disaster in Japan and flooding in Thailand had a
considerable impact on the car audio and navigation business. The
Company, in order to enhance cost competitiveness that will allow
the business to adapt to the global business expansion of its clients,
strengthened overseas production capacity and reorganized the
Japanese production structure to which it is linked.
Device Solutions
The Device Solutions segment provides cutting-edge technology
products, such as LSI devices used in digital home appliances, auto-
mobiles, mobile phones and servers, as well as electronic compo-
nents consisting chiefly of semiconductor packages.
Net sales in this segment totaled ¥584.7 billion ($7,130 mil-
lion), a decrease of 7.3% from the previous fiscal year. Sales in Japan
fell 5.1%. Sales of LSI devices decreased due to the completion in the
first quarter of shipments of CPUs for Japan’s Next-Generation Super-
computer system, which were produced in high volume in fiscal
2010, as well as to the impact from the earthquake disaster in the
first quarter. Another factor was the decline for digital AV systems as
a result of the flooding in Thailand. Electronic components sales also
fell on slack demand for semiconductor packages. Sales outside
Japan decreased 10.2%, or 4% on a constant currency basis. In LSIs,
098 FUJITSU LIMITED ANNUAL REPORT 2012