January 30, 2009

NEC, Hitachi Report Losses, Blame Weakened Demand

Japan's NEC Corp. announced on Friday it plans to cut 20,000 jobs of its 150,000-employee workforce.

NEC reported a fourth quarter net loss of 130 billion yen ($1.46 billion) from 5.2 billion during the same quarter in 2007.

"It is regrettable that we have to announce such a big downgrade," said Kaoru Yano, president of NEC. "We must cut waste."

The Tokyo-based company said job cuts, which will take place by March 2010, would save 80 billion yen ($890 million) over the next two years.

NEC's sales of electronic parts and semiconductor operations fell nearly 30 percent.

NEC now expects a net loss of 290 billion yen for the full fiscal year through March.

According to the New York Times, who cited a Japanese news report on Friday, NEC is in talks with Toshiba Corp., possibly seeking a 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," said the Times.

Global chip sales will fall 16 percent in 2009, more than the 4.4 percent drop last year, Gartner Inc. said in December.

Japanese electronics maker Hitachi Ltd. also announced plans to cut 7,000 jobs in light of its forecasted $7.7b loss.

Hitachi had previously expected a 15 billion yen ($167m) profit forecast in October.

The company pointed to falling demand for its electronics in main businesses including electronic devices, power and industrial systems, and consumer products.

"Economic stagnation is expected to persist for the foreseeable future, making revenue expansion unlikely," Hitachi said in a statement.

"Revenue for the 2009 financial year is expected to fall greatly due to the quick slowdown of demand for automobiles, semiconductors and industrial machinery," it said.

Hitachi expects to save 200 billion yen ($2 billion) by March 2010 through the cutbacks.


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