The credit rating on Fujitsu Ltd. was lowered to "BB plus" from "BBB minus," S and P said.

"Given Fujitsus weak earnings base, it will likely take significant time for the company to improve its financial profile to a level consistent with that of the previous rating category," said Fusako Nagao, credit analyst at the international rating agency.

"Although the company has posted substantial restructuring costs over the last few years, its reforms have not been enough to restore its competitiveness in core operations," she said in a statement.

"The rating could be lowered further if the company does not achieve a recovery in earnings and reduce debt as planned," S and P said.

Fujitsu said last month it continued to lose money in the June quarter due to weak global demand, a delay in mobile phone shipments and damage suffered from an earthquake in May.

Fujitsu's net loss was 39.8 billion yen (333.7 million dollars), compared with 56.4 billion yen lost during the same quarter last year.

At the end of June 2003, Fujitsus ratio of net debt to capital was 64.5 percent, deteriorating from 61.7 percent as of March 2003, S and P said.

Fujitsu has struggled to make profits in the platform business on falling prices, S and P said, adding that the business environment was expected to remain difficult.

"In the electronic devices business, Fujitsu lacks competitive products to ensure an improvement in earnings," it added.

SPACE.WIRE