NEC hit by Q3 fall in telecom, semiconductors

An increasingly worsening market for both cellular-telephone handsets and network-infrastructure equipment compounded NEC's woes in the semiconductor sector in the third quarter, the company said Thursday.

Reporting results for the fiscal third quarter, the period from October 2001 to December 2001, NEC said a net profit of ¥8.3 billion (US$63.3 million as of Dec. 31, 2001, the last day of the quarter) reported in the last three months of 2000 turned into a net loss of ¥155 billion. Net sales across the entire group fell by 9.5 percent on the same period in 2000 to hit ¥1.1 trillion, the company said in a statement.

The slide in sales of telecom products, a result of decreased investment by carriers and a previous oversupply of telephone handsets, hit the company at two levels. Its networks division, which markets finished equipment, saw network infrastructure sales drop 5 percent and handset sales fall 6 percent, while its electron devices division, which produces components for handsets, saw sales of chips and LCD (liquid crystal display) screens fall as other manufacturers were affected by the slowdown.

Added to existing problems in the semiconductor sector, where prices of computer memory chips languished at near-all-time lows, total sales in the division fell 33.4 percent as it racked up ¥55.3 billion in losses for the company.

One of the few bright points in the results was in the company's systems-integration business, which continues to benefit from increasing use of outsourcing services by Japanese companies. System-integration sales and those of Internet services jumped 27 percent on the year-ago quarter. Sales of servers and workstations also increased, up 15 percent, it said.

NEC's results mirror those of Toshiba Corp. and Fujitsu Ltd., both of which said earlier this week that they lost money during the same period.

Like its two fellow companies, NEC also revised down its estimates for full-year results. The company cut its net-sales forecast from ¥5.34 trillion to ¥5.07 trillion and said it expects group net losses will total ¥300 billion, double its previous estimate. At the beginning of the current fiscal year in April, the company forecast net sales of ¥5.85 trillion and net income of ¥65 billion.

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