Bloomberg News

NEC to Cut 10,000 Jobs After Forecasting Third Loss in 4 Years

January 27, 2012

Jan. 26 (Bloomberg) -- NEC Corp., forecasting its third annual loss in four years, will cut 10,000 jobs, about 8.6 percent of its workforce, as slower global growth damped demand for its mobile phones, computers and wireless gear.

NEC forecast a 100 billion yen loss ($1.3 billion) for the year ending March 31, abandoning a previous outlook for a 15 billion yen profit, the Tokyo-based company said in a statement today. Most of the job cuts will come from the company’s mobile- phone handset business and will begin as early as March 31, President Nobuhiro Endo told reporters today in Tokyo.

About 7,000 jobs will be eliminated in Japan and NEC will take a 40 billion yen charge for restructuring and workforce eliminations costs, according to the statement. Half of the total reduction will affect full-time jobs, Endo said.

“NEC has to focus on their strengths and cut the rest,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “It needs to focus on what it is good at.”

The computer maker’s shares were unchanged at 168 yen as of the 3 p.m. close of trading in Tokyo, before the statement was released. NEC has lost 31 percent of market value in the past 12 months, compared with a 23 percent drop for rival Japanese computer maker Fujitsu Ltd. and a 17 percent decline for the broader Topix index.

NEC also won’t pay a year-end dividend, according to today’s statement.

The company, which formed a venture with Lenovo Group Ltd. last year, had 115,840 employees at the end of March, compared with 154,786 in fiscal year 2007, according to data compiled by Bloomberg. Lenovo, China’s biggest personal-computer maker, agreed to invest $175 million in the venture to expand in Japan.

NEC’s net loss widened to 86.5 billion yen in the three months ended Dec. 31, from 26.5 billion yen a year earlier, according to the statement today. Sales fell 6.7 percent to 672 billion yen.

--Editors: Dave McCombs, Frank Longid

To contact the reporter on the story: Anand Krishnamoorthy in Singapore at anandk@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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