Bloomberg News

NEC Net Forecast Misses Estimates on Pension-Related Charge

April 27, 2012

NEC Corp. (6701) forecast profit lower than analysts’ estimates as Japan’s biggest maker of telecommunications equipment took a pension-related charge.

Net income may be 20 billion yen ($248 million) for the current fiscal year, compared with a loss of 110 billion yen for the 12 months ended March 31, the Tokyo-based company said in a statement today. The result was lower than the 29 billion yen average of 11 analyst estimates compiled by Bloomberg. NEC is taking a 5 billion yen charge to transfer some of its stake in Renesas Electronics Corp. (6723) to its pension trust, it said.

NEC, which posted its third annual loss in four years, took a charge of about 40 billion yen for restructuring including cutting 10,000 jobs or about 8.6 percent of the workforce. It’s focusing on carrier-network business and cloud computing, as it failed to win customers with its Medias smartphones and LaVie notebook computers. Apple Inc. (AAPL:US) almost doubled its profit last quarter with the iPhone and iPad.

The network builder formed a venture with Lenovo Group Ltd. (992), China’s biggest PC maker, last year. NEC, Casio Computer Co. (6952) and Hitachi Ltd. (6501) merged their mobile-phone handset operations in 2010.

Sales may rise 3.7 percent to 3.15 trillion yen. Operating profit may rise 36 percent to 100 billion yen, the company reported today.

NEC fell 4 percent to 145 yen in Tokyo trading before the company announced its earnings. The stock has lost 7.1 percent this year, compared with a 10 percent gain for the broader Topix index.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

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


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