Fujitsu Ltd, the world's third biggest maker of memory chips for mobile phones, said it will have its first profit in three years in the year starting April 1 after cutting costs and selling shares.
Fujitsu will probably have group net income of ¥50 billion (US$420 million), provided a war in Iraq isn't prolonged, senior executive vice president Takashi Takaya said in an interview.
Fujitsu, which forecasts a ¥110 billion loss this year, expects sales to be unchanged at ¥4.7 trillion, he said.
The Tokyo-based company, hurt by slumping sales of semiconductors and telecommunication equipment, will shave ¥30 billion in fixed costs, including wages, Takaya said.
It will also have a one-time gain from selling assets such as shares in Advantest Corp and Fanuc Ltd, he said.
"Having Advantest and Fanuc shares is the only thing that makes Fujitsu better than companies posting similar losses," said Makoto Suzuki, who helps manage ¥200 billion, including Fujitsu shares, at Chuo Mitsui Asset Management Co.
"The business environment is still poor for Fujitsu," Suzuki said.
Fujitsu holds a 30 percent stake in Fanuc and has 21 percent of Advantest.
Takaya, who is also Fujitsu's chief financial officer, didn't say when Fujitsu would sell the shares or elaborate on monetary terms.
The company cut its workforce by 13 percent in the past two years and is seeking partners for what Takaya calls its three "problematic" businesses -- its US optical network equipment operations, flash-memory chips and hard disk drives.
"I am thinking of all kinds of options in those three sectors -- alliances, joint ventures or sales," Takaya said.
"We have to cut costs in development, production and marketing," he said.
Takaya declined to say with which companies Fujitsu is in talks.
For flash-memory chips, the main memory in mobile phones, Fujitsu wants to expand its alliance with Advanced Micro Devices Inc, he said.
Advanced Micro wants to specialize in memory chips for mobile phones, while Fujitsu is trying to sell more of the chips for digital consumer electronics.
"We need to work out this difference," Takaya said.
On its US business, Fujitsu will strengthen cooperation between its software and service unit Fujitsu Consulting Holdings Inc and its optical network gear unit Fujitsu Network Communications Inc, Takaya said. He cited increasing customer requests for hardware and services from a single vendor.
Operating profit, or sales minus cost of goods sold and selling and administrative costs, will be about ¥150 billion in the year starting April 1, up 50 percent from the projected ¥100 billion in the current business year, Takaya said.
The profit gain will mainly result from cost cuts because selling prices will drop, Takaya said.
In terms of volume, demand is rising for Fujitsu products such as chips, computers and communication equipment, he said.
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