NEC's loss widens, plans to cut 20,000 workers

Japanese electronics giant NEC Corp. said it will cut 20,000 workers worldwide as it tries to stanch widening losses from semiconductors and other businesses that have been hard hit by competition and the global economic slump.

 

NEC's net loss for October-December swelled to 130 billion yen ($1.46 billion) from 5.2 billion yen a year earlier, it said Friday. Tokyo-based NEC said it would sink into the red for the full year through March as well.

The company hopes the job cuts, which will be split equally between Japan and overseas, will help save 80 billion yen over the next two years.

As Japanese electronics makers struggled to stay afloat in a shrinking market, a Japanese newspaper reported Friday that NEC was in talks with Toshiba Corp. to seek a possible chip alliance.

The Nikkei business daily said the talks focused on the possibility of Toshiba spinning off its system chip operations and incorporating them with NEC Electronics Corp., a semiconductor unit owned by NEC.

NEC declined to confirm the report, saying it was not based on an official company announcement.

NEC said its operations worsened all round, from information technology to mobile and electronic devices, as the company was faced with a deepening global slump and escalating competition in the electronics industry. NEC also blamed the stronger yen for squeezing profits.

Revenue for the fiscal third quarter was down slightly at 948 billion yen from 1.05 trillion yen a year earlier.

By segment, electronic parts and semiconductor operations took the worst beating, with sales falling nearly 30 percent on declining demand for personal computers and display, as well as semiconductors for automobiles. Mobile and networking businesses also suffered because of falling investment by service providers.

NEC now expects a net loss of 290 billion yen for the full fiscal year through March, a steep plunge into the red from the 15 billion yen net profit projected in October. The company also cut its sales estimate to 4.2 trillion yen for the full fiscal year, compared with the previous forecast of 4.6 trillion yen.

NEC shares declined 6.5 percent Friday in Tokyo. The company announced earnings results after trading closed.