8/19 -- Fujitsu reportedly to cut 15,000 jobs and close some overseas plants -->
By Reuters
August 19, 2001, 10:30 a.m. PT
news.cnet.com
TOKYO--Japanese giant chipmaker Fujitsu will slash its worldwide workforce by
15,000, or nearly 10 percent, and close some overseas plants in response to the
high-tech slump, a newspaper reported Sunday.
Details of the sweeping restructuring, which had been flagged by Japan's biggest flash memory
chipmaker, would be announced Monday, the Nihon Keizai Shimbun business daily said
without citing sources.
No one was available to comment at Fujitsu.
The chip giant shocked the market last month by forecasting a $1.83 billion consolidated net
loss for the year to next March, largely reflecting a massive restructuring charge to cope with
the chip and electronics slowdown. That was steeply down from its previous profit estimate of
$41 million.
Fujitsu will slash the jobs by next March, the paper said, while Kyodo news agency said the
plant closures will take place by March 2004.
Analysts have taken a positive view of the company's pledge to buckle down and reform after
months of sticking stubbornly to rosy forecasts that critics said were overly optimistic.
The company, which reported a group operating loss of $351 million in the April-June quarter,
will consolidate its domestic and overseas plants for computers and telecommunications
products, the newspaper said.
Only 3,000 job cuts in Japan
Manufacturing plants in North America and the rest of Asia are expected to bear the brunt of
the overhaul, with only 3,000 workers at home expected to lose their jobs, it said.
An early retirement system introduced last month will be used at home, Kyodo reported, citing
company officials.
They also said Fujitsu will consider consolidating its product lines for semiconductors--the
main culprit for the firm's weak earnings performance--including those in northern Japan.
Fujitsu plans to scale down its hardware operations and concentrate on the software and
services divisions with high growth potential to improve profitability, they said.
It will also focus on production of profitable high value-added items in its mainline operations
such as microchips, computers and communications equipment, they said, according to
Kyodo.
In the telecommunications field, Fujitsu will end production of switches in the United States
and concentrate on fiber-optic products.
Fujitsu will shift several thousand production workers to software and services divisions and
create a task force to promote global corporate alliances and buy-outs in these fields, it said.
Fujitsu's announcement would come in the wake of flagging worldwide PC sales and a focus at
PC makers on managing costs, including through deep job cuts. Fujitsu last month announced
a four-week summer suspension in output of some of its flash memory chips, which are mainly
used in mobile phones--one of the hardest-hit sectors in this year's info-tech slump.
It also said it would sharply cut flash memory chip production at its U.S. facility in Oregon, its
only remaining overseas semiconductor plant.
Analysts expect Fujitsu's once hugely profitable flash memory business to do little more than
break even in the current business year.
The software and service segment, Fujitsu's stronghold, is also suffering from slow demand at
home because debt-ridden Japanese banks are cautious about lending to companies for
spending on information technology, analysts said.
Fujitsu said last month it plans to post a $2.32 billion special loss in the six months to June 30
to restructure its operations and boost earnings. The special loss would total $2.49 billion for
the full year through next March.
It has lowered its semiconductor capital expenditure target for this business year to $1.16
billion from an originally planned $1.57 billion.
In addition, it has cut its chip output target to $3.94 billion from an originally planned $5.72
billion, down 24.6 percent from actual output in the previous year. |
