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Fujitsu Reports Fiscal 2006 First-Half Financial Results; Sharply Higher Earnings on Continuing Strong Sales Growth Overseas and Further Progress in Generating Cost Efficiencies.



Tokyo, Japan, Oct 26, 2006 - (JCN JCN Japan Corporate News
JCN Journal of Cognitive Neuroscience
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 Newswire) - Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales Net Sales

The amount a seller receives from the buyer after costs associated with the sale are deducted.

Notes:
This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight
 of 2,362.3 billion yen (approximately US$20,020 million*) for the first half of fiscal 2006 (April 1, 2006 - September 30, 2006), an increase of 7.8% over the first half of fiscal 2005. The solid sales results were driven by double-digit year-on-year overseas sales growth in each of the company's three major business segments, with modest growth in Japan. Overseas sales of IT services were exceptionally strong, rising 25.8% over the first half of fiscal 2005 on continued growth in outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management.  services in the UK and the impact of acquisitions in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .

Fujitsu posted consolidated operating income Operating Income

The profit realized from a business' own operations.

Notes:
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit.
 of 50.6 billion yen (US$429 million), an improvement of 3.0 billion yen over the first half of fiscal 2005. Despite increased expenses relating to relating to relate prepconcernant

relating to relate prepbezüglich +gen, mit Bezug auf +acc 
 strategic investments for future growth, higher sales combined with continued progress in driving down costs and realizing efficiency gains through intensified in·ten·si·fy  
v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies

v.tr.
1. To make intense or more intense:
 efforts in manufacturing innovation led to the higher operating profit Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.


operating profit

See operating income.
. The company posted sharply higher net income of 14.8 billion yen (US$126 million) in the first half, an increase of 7.1 billion yen over the first half of fiscal 2005. In addition to the contribution from higher operating income, an improvement in non-operating items, such as a significant reduction in the amortization of unrecognized obligation for retirement benefits, resulted in the near doubling of net income compared to the previous year.

Business Segment Results

Consolidated first-half net sales in the Technology Solutions segment, which includes the System Platforms and Services sub-segments, rose 6.3% over the same period in fiscal 2005 to 1,428.6 billion yen (US$12,107 million). Sales in Japan were roughly flat, as higher sales of solutions/systems integration services were offset by lower sales of mobile phone base stations, which had been especially strong in the first half of fiscal 2005. Overseas sales, however, increased by 23.3%, driven by continuing strong performance in outsourcing and other services businesses, as well as higher sales of optical transmission systems and UNIX servers A medium to large-scale computer system in a network that runs under Unix. Unix servers are widely used as application servers and database servers and are available from a variety of vendors, including Sun, IBM, HP and others. . Operating income for the segment was 36.4 billion yen (US$309 million), roughly the same level as in the first half of fiscal 2005, as higher profits in overseas businesses were offset by the effect of lower year-on-year sales of mobile phone base stations.

Net sales in the Ubiquitous Product Solutions segment, which includes PCs, mobile phones, hard disk drives (HDDs) and other products, were 528.6 billion yen (US$4,480 million), an increase of 6.1% over the same period last year. Despite higher sales of mobile phones, sales in this segment in Japan increased by only 1.9%, primarily as a result of sluggish PC sales in the consumer sector. Overseas sales increased by 14.2%, led by strong sales of notebook PCs and HDDs. Overall, the segment posted operating income of 19.9 billion yen (US$169 million), an increase of 3.3 billion yen over the comparable period last year. Progress in generating cost efficiencies and quality improvements helped to offset intensified price competition in PCs and HDDs, both in Japan and overseas markets.

Net sales in the Device Solutions segment increased 12.2% over the first half of fiscal 2005, to 376.9 billion yen (US$3,195 million), driven by strong demand for the company's logic LSI LSI: see integrated circuit.


(Large Scale Integration) Between 3,000 and 100,000 transistors on a chip. See SSI, MSI, VLSI and ULSI.
 devices for automotive and digital appliance Any apparatus controlled by a computer. It may refer to an actual household appliance (coffee maker, toaster, etc.) that is computerized, but often refers to a handheld device such as a pager, cellphone or PDA. See Internet appliance.  applications. Operating income for the segment was 16.0 billion yen (US$136 million), an increase of 3.5 billion yen over the previous year. Despite an increase in development costs, the company was able to achieve higher profitability in this segment because of higher logic LSI device sales and continuing strong performance in electronic components.

In order to further strengthen its business outside Japan, in June Fujitsu appointed senior executives as heads of regional operations in the following four areas: the Americas, EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets.  (Europe, Middle East and Africa), China, and Asia-Pacific. Reflecting this change, beginning with the current first-half fiscal 2006 financial results, the company has revised its geographic segment categorization, renaming the former Europe segment as EMEA (Europe, Middle East and Africa) and the former Asia, Australasia & Others segment as APAC APAC Australian Partnership for Advanced Computing
APAC Agricultural Policy Analysis Center
APAC Asia and Pacific
APAC Asian Pacific American Coalition
APAC Adapted Physical Activity Council (American Alliance for Health) 
 (Asia-Pacific) & China. In the first half of fiscal 2006, all three overseas geographic segments (The Americas, EMEA, and APAC & China) recorded double-digit year-on-year sales increases, and together achieved combined operating income of 21.6 billion yen (US$184 million), 3.4 billion yen higher than in the first half of fiscal 2005.

Fiscal 2006 Full-Year Earnings Projections

Fujitsu is maintaining its fiscal 2006 full-year consolidated earnings forecast unchanged, as follows:
Net Sales               5,200.0 billion yen
Operating Income        190.0 billion yen
Net Income              80.0 billion yen


Although first-half results exceeded previous projections, and in spite of Fujitsu's expectation that market demand in Japan and overseas will be favorable fa·vor·a·ble  
adj.
1. Advantageous; helpful: favorable winds.

2. Encouraging; propitious: a favorable diagnosis.

3.
 in the third quarter, various uncertainties remain regarding the fourth quarter, in which both sales and operating income tend to be concentrated for the company's system products and solutions/systems integration businesses. Therefore, at the present time, the company's outlook for the full year has not changed.

Complete information on Fujitsu's first-half fiscal 2006 financial results, including financial tables, explanation of results and supplementary information, may be found at: http://www.fujitsu.com/about/ir/

* Yen figures are converted to U.S. dollars, for convenience only, at a uniform rate of $1 = 118 yen, which was the approximate Tokyo foreign exchange market rate at September 30, 2006.

Note: These materials may contain forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
 that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors:

- General economic and market conditions in key markets (particularly in Japan, North America and Europe)

- Rapid changes in the high-technology market (particularly semiconductors, PCs, etc.)

- Fluctuations in exchange rates or interest rates

- Fluctuations in capital markets

- Intensifying in·ten·si·fy  
v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies

v.tr.
1. To make intense or more intense:
 price competition

- Changes in market positioning due to competition in R&D

- Changes in the environment for the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  of parts and components

- Changes in competitive relationships relating to collaborations, alliances and technical provisions

- Potential emergence of unprofitable projects

About Fujitsu Limited

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing computing - computer  and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE See Tokyo Stock Exchange.

TSE

1. See Tokyo Stock Exchange (TSE).

2. See Toronto Stock Exchange (TSE).
: 6702) reported consolidated revenues of about 4.8 trillion yen (US$40.6 billion) for the fiscal year ended March 31, 2006. For more information, please see: www.fujitsu.com

Source: Fujitsu Limited

Contact:
Fujitsu Limited
Public and Investor Relations
http://www.fujitsu.com/global/news/contacts/
+81-3-3215-5259


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Date:Oct 26, 2006
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