NEC revises earnings outlook

NEC has revised its earnings outlook for the current financial year. The company now expects to report a group net loss of 150...

NEC has revised its earnings outlook for the current financial year. The company now expects to report a group net loss of 150 billion yen (£880m) for the period.

The company, one of Japan's largest manufacturers of semiconductors and electronics, had previously forecasted a net profit of 65 billion yen (£368m). Last year NEC reported a net profit of 56.6 billion yen (£323m).

The company blamed continuing sluggish demand for IT products for the revision. NEC had been holding out hope of a recovery in the US market towards the end of this year. However, the terrorist attacks on the World Trade Centre and Pentagon earlier this month now mean that such a recovery is unlikely to materialise, it said.

NEC president, Koji Nishigaki, said the revised figures were a conservative estimate of what the company is likely to report at the fiscal year-end on 31 March 2002. However, the market is still hard to forecast after the terrorist attacks, he said.

"There could be problems at NEC if US consumer demand falls because of the attacks," he said. "However, as we decided to withdraw from DRAM production, we can keep to (the revised) numbers in the second half of this year."

"We are analysing the influences [on semiconductor business] from data from the period of the Gulf War and oil crisis [of the 1970s]," said Kanji Sugihara, president of NEC Electron Devices. "We expect a fall of 40% in the US, which would lead to a 4% decrease globally."

NEC sees potential opportunities for its network business in the US as a result of the bankruptcy and scaling-down of competitor operations. According to Nishigaki: "This may strengthen our (network) business in the US."

The announcement follows the unveiling of a sweeping reorganisation of its semiconductor businesses in late July. At the time, Nishigaki said his company would completely withdraw from the DRAM chip business by 2004 to focus all of its efforts on large scale integration chips.

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