Fujitsu Builds on Data Center Success

Fujitsu Ltd. (OTC: FJTSY; Tokyo: 6702) unveiled its first-quarter results today, posting a net loss of 4.3 billion (US$40 million). However, this was a big improvement on the ¥37.8 billion ($352 million) operating loss posted in the same period last year.

The company’s consolidated net loss for the first quarter was ¥11.8 billion ($109 million) compared to ¥39.8 billion ($368 million) recorded in the first quarter of 2003. Fujitsu execs blamed the losses on a number of factors, including intense competition for software and services in the Japanese market.

Like a number of hardware vendors, Fujitsu has had a tough ride over recent months and was forced to restructure much of its business last year.

But it was not all bad news in today’s results. Fujitsu’s net sales in its platforms business, which includes data center hardware, were ¥359.4 billion ($3.3 billion), an increase of 15.1 percent on the same period last year. According to Fujitsu execs, the company was able to narrow its losses thanks to strong enterprise sales of Unix servers and mainframes.

Not surprisingly, the data center is a major target for Fujitsu at the moment. Last week Chiaki Ito, the company’s corporate executive vice president, unveiled plans to expand utility computing offerings. This involves expanding Fujitsu’s open systems business and "autonomic computing," the somewhat ill-defined term for self-managing computer systems.Although Fujitsu’s PC business suffered as a result of declining prices in this quarter, corporate purse-strings are being loosened, and the company is now looking to exploit its broad server range. These include the GS21 mainframe system, the Sparc-based Primepower Unix server, and the Intel-based Primergy and MC IA servers.

Another major area of focus for 2005 is improving productivity, with the company hoping to slash development time by almost a third. Fujitsu estimates that this will help reduce costs by more than ¥100 billion per year.

Last month, Fujitsu announced an extensive agreement with Sun Microsystems Inc. (Nasdaq: SUNW), another vendor that has been sailing through choppy waters in recent months. The deal involves combining the companies’ Solaris and SPARC-based server product lines by mid-2006, creating a new family of data center systems, code named the Advanced Product Line (APL). (See Sun & Fujitsu Join Forces.)

More recently, Fujitsu also extended its relationship with Microsoft Corp. (Nasdaq: MSFT) to collaborate on the company’s next generation of Intel-based servers (see Fujitsu and Microsoft Team Up).

— James Rogers, Site Editor, Next-gen Data Center Forum0