NEC to raise $1.6bn in share sales to offset losses

NEC is...

NEC is the latest company in the recession-hit electronics industry to issue new shares to raise capital.

The $1.6bn issue of new shares will allow the Japanese electronics company to maintain the research and development spending necessary to remain competitive.

Earlier this year, Toshiba raised Y500bn.

Like most other large electronics companies in Japan, NEC has been hard hit by reduced tech spending by corporates as they attempt to cut costs to ride out the recession.

In January, NEC announced it was to cut 20,000 jobs worldwide because of the economic downturn.

In its last financial year, NEC lost Y297bn and is carrying a debt of around Y692.3bn, with a number of bonds due for redemption within the next year, according to the Financial Times.

NEC said it will invest Y40bn in developing cloud services, Y20bn will be invested in its telecom products, and Y20bn will be invested in green technology. The rest will be used to repay debt.

The move by NEC is expected to prompt other Japanese companies such as Hitachi to take advantage of the rally in financial markets to raise capital.

In further plans to aid recovery from the recession, NEC has begun a restructuring programme aimed at cutting fixed costs by Y290bn in the year to end of March 2010.



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