FSC to cut EMEA jobs after profits plummet

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By  Published  October 20, 2006

Fujitsu Siemens Computers (FSC) has seen its profits decimated in the first half of its fiscal year — down 85% — due to tough market conditions across the Europe, Middle East and Africa (EMEA) region and costs incurred though its acquisition of a division of Siemens Business Services.

The vendor said job cuts across EMEA were now likely, in addition to other cost-saving measures, in order to ensure profitable growth, but did not give any further details.

Despite revenue increasing by 7% to US$3.8 billion in H106 — which runs from April to September — the firm’s operating profit fell by close to 42%; to US$22.5million from US$38.8m- illion last year.

FSC claimed a combination of declining average selling prices, margins and revenue all contributed to the drop in operation profit.

Oversupply in the channel caused by industry overstock in the first quarter and the introduction of the EU directive on the Restriction of Hazardous Substances (RoHS), which came into effect on July 1 this year, also had a negative impact on FSC’s business.

Profits were driven down further by restructuring costs of US$17.5 million incurred in the purchase of the Product Related Services Division of Siemens Business Services — now called IT Product Related Services (ITPS) — in April causing pre-tax profits to collapse from US$33.8 million in H105 to just US$5 million this year.

“For the first time in its history, the IT industry is experiencing that a generally good economic climate is not automatically followed by increased demand in the IT sector,” commented Bernd Bischoff, president and CEO of FSC.

“I am convinced that we have taken the right steps and that our portfolio of products, solutions and services will allow us to fulfil our strategy of offering end-to-end solutions delivering true value-add to our customers,” he added.

Bischoff said FSC’s performance in the Middle East market had also been affected by RoHS, stating it had “made business harder for us”.

FSC’s year-on-year growth in the Middle East and Africa (MEA) PC market was down from over 80% in the first quarter of the calendar year to just above 10% in the second quarter, figures from market research firm IDC showed.

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