Published on January 14, 2006

TSE’s decision to boost trading lifts its fortunes. Fujitsu’s stock jumped more than 5 per cent yesterday on news that the struggling company plans to expand its hard disk drive business and that the Tokyo Stock Exchange – which uses Fujitsu software – plans to boost trading capacity.

Fujitsu is the main supplier for the exchange’s computer trading system, which has been plagued by trading problems in recent months due to increased trading volume in view of Japan’s economic recovery.

The two pieces of good news, which lifted Fujitsu shares 5.1 per cent to close at 1,058 yen, are a welcome respite for the company.

Fujitsu also said yesterday that it would seek to more than double its profits and shipments in its hard disc drive business over the next three years, targeting more sales to consumer-electronics goods makers.

The Tokyo-based maker of computer, software and telecommunication equipment has been undergoing restructuring steps after high costs and sluggish sales weighed on its earnings in the last few years.

As part of its growth strategy, Fujitsu said yesterday that it will enter the 1.8-inch HDD business via a development tie-up with Cornice, a Colorado-based venture that specialises in small HDDs for use in consumer electronics devices.

“We will focus on where the growth is,” Fujitsu corporate senior vice president Ichiro Komura said.

Fujitsu has so far been focusing on 2.5-inch HDDs for portable personal computers and 3.5-inch HDDs for computer servers. It ranks second globally by units shipped in these two markets.

New growth areas include HDDs for non-IT applications such as portable music players, video cameras and car-related devices, as well as smaller HDDs for computers, Komura said.

In the HDD business, Fujitsu aims to rack up an operating profit of ?20 billion (Bt6.8 billion) on sales of ?400 billion in fiscal 2008 said Komura, who heads the company’s storage product division.

That would be a big improvement on the profit of ?6 billion on sales of ?280 billion that it expects this fiscal year through March in this business.

If it can get its HDD-related sales up to ?400 billion, it would likely be the world’s third-largest HDD maker in fiscal 2008 with about a 15-per-cent global market share, up from its current position of fifth with about a 10-per-cent share, Komura said.

The company plans to begin offering 1.8-inch HDDs with a capacity of 120 gigabytes in the first half of fiscal 2007. It said it has exclusive marketing rights for the HDDs to be developed with Cornice.

Fujitsu also said it has no plan to enter the market for HDDs smaller than 1.8 inches as there would likely be fierce competition in this area from large-capacity flash memory chips for compact mobile gadgets.

In the fast-growing portable digital music player market, for example, sales of flash memory-type models are booming as they are more compact than HDD-type models.

Like other Japanese electronics makers, Fujitsu sank into the red in recent years as prices on digital parts plunged and cheaper Asian rivals grabbed bigger market share. It stopped making 3.5-inch hard disk drives for desktop computers in 2001, and abandoned the plasma-display panel business last year.

Agencies

TOKYO

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