Fujitsu has lowered its forecast for its 2006 fiscal year, ending March 31, to a loss of ¥275 billion (US$2.35 billion), from an earlier projected profit of ¥55 billion.

The company's sales forecast remained unchanged. The problems do not stem from its main business, Fujitsu said, although it acknowledged a weak market for large-scale integration chips, slow PC sales and a delayed recovery in the optical transmission systems business.

Instead, the revision is due to a ¥350 billion downward revaluation of its shareholdings in overseas subsidiaries and affiliates. By revaluing its holdings, Fujitsu has to take an accounting charge against its earnings.

Without the charge, Fujitsu said it would have turned a profit for the year, and it anticipates stable profits going forward, it said.

The projected loss for 2006 compares to a net profit ¥17.4 billion in 2005, on sales of ¥2.85 trillion. The company's 2006 sales forecast remains ¥2.95 trillion, it said.

Also on Tuesday, Fujitsu said it sold shares of Fanuc for a gain of ¥70 billion, which it will record in the 2006 fiscal year.

The IDG News Service is a Network World affiliate.