Friday September 28, 6:36 am Eastern Time
NEC Cuts Earnings Outlook, Chip Capacity
By Edmund Klamann
TOKYO (Reuters) - Japan's NEC Corp, the world's third-largest chipmaker, on Friday
warned it would post a net loss this business year, joining a steady stream of electronics firms
cutting earnings forecasts as the global economy worsens.
The company also announced a new series of restructuring steps, including
300 job cuts at a California chip plant and the closure of a semiconductor
line in southern Japan, aiming to get its chip business back in the black in
the next business year.
``We believe our structural reforms will steer us toward a firm recovery in
our earnings next year and beyond,'' NEC President Koji Nishigaki told a
news conference.
The company cut its forecast for consolidated operating profit for the year
to next March to 30 billion yen ($250 million) from an April forecast of
210 billion yen, and projected a 150 billion yen net loss for the year
compared with an original forecast of a 65 billion yen profit.
Like Japan's other chipmaking conglomerates, NEC was hit hard by this year's severe downturn in the semiconductor market
-- the worst ever -- with dynamic random access memory (DRAM) chip operations alone accounting for 80 percent of the
expected 100 billion yen loss in its electronic device division.
Jitters about an imminent profit warning had weighed heavily on NEC shares in recent weeks.
The company's share price is off more than 50 percent since the start of the year, exceeding declines at Japan's other
chipmaking conglomerates.
The profit warning sent NEC's shares tumbling further in late afternoon trade on Friday to their lowest since November 1998.
They closed 8.8 percent lower on the day at 973 yen.
The benchmark Nikkei average ended up 0.81 percent.
CONSERVATIVE VIEW
Nishigaki said the attacks on New York and Washington landmarks earlier this month had dealt an unexpected blow to the
company's outlook, but played down the possibility that the latest figures might require a further downward revision.
``We have taken a very conservative view, so unless things get considerably worse, I think we'll be able to stick with this,'' he
said.
NEC is the last of Japan's five major electronics firms to revise its full-year forecasts since signs emerged late in the spring that
this year's chip slump would be deeper and longer-lasting than expected.
The company said it now expects a net loss of 30 billion yen in the half-year to September, after revising original six-month
forecasts once in July to a three billion yen profit.
NEC also said Elpida Memory Inc, a 50-50 joint venture with Hitachi Ltd that is set to take over NEC's DRAM operations
over the next three years, would delay the start of production until next October. It had originally planned to begin output by the
spring.
NEC has been producing a steady stream of restructuring announcements in recent weeks as it seeks to bolster profitability in
the face of the market's downturn.
On Tuesday, it announced plans to integrate its electronic components operations with a parts-making affiliate, while Friday's
announcement included plans for a 15 percent cut in wafer processing capacity by the end of the business year compared with
last year's levels.
A spokesman said the additional job cuts in California, however, would not result in an increase in the target, set in July, for
4,000 job reductions in the current business year for the NEC group as a whole.
($1-119.68 Yen)
Friday September 28, 7:08 am Eastern Time
Sony Cuts Outlook as Sales Slump
TOKYO (Reuters) - Sony Corp, the world's biggest maker of audio-visual equipment, said
on Friday that slumping sales in the United States and restructuring charges would push its
net profit even lower than it had expected.
Consolidated operating income for the
business year next March is now expected to be $1 billion instead of the
$2.1 billion projected in a previous revision in July.
The sales outlook for 2001/02 was pared back to $63.1 billion from
$64.8 billion.
``From the outlook in April, the current situation has turned much more
severe,'' said Teruhisa Tokunaka, Sony's chief financial officer, echoing
words used by Japan's electronics companies as they announced recent
outlook revisions and restructuring steps.
In after-hours trading on Instinet, Sony shares were changing hands at
4,350 yen, down 40 yen or 0.09 percent from Friday's close in Tokyo of
4,390 yen.
Chairman Nobuyuki Idei and President Kunitake Ando were set to speak at 5 p.m (4:00 a.m. EDT).
Japan's electronics companies have issued a slew of downward revisions to earnings forecasts in recent weeks as the infotech
slump drags on longer than expected. The outlook has been further clouded by the air attacks on U.S. landmarks earlier this
month.
Tokunaka said the revised outlook took into account the potential impact from the attacks in New York and Washington.
Masayuki Yonezawa, analyst at BNP Paribas, said Sony's group operating profit forecast was much lower than analysts'
projections of 180 billion to 200 billion yen.
``This goes to show that the company is expecting very tough times in the Christmas holiday season,'' he said.
In a bid to streamline its business, Sony also plans to incur a total restructuring cost of 50 billion yen for this business year,
including 20 billion yen from additional restructuring of its group operations.
Sony said it would aim to cut annual materials cost by more than 15 percent in the year ending March from the previous year.
As a result, Sony said its group net profit would total 10 billion yen for the year ending next March, sharply down from its July
estimate of 90 billion yen. This is also down 40 percent from its actual profit the previous year.
Just hours before Sony's announcement, NEC Corp, the world's third-largest chipmaker, issued loss warnings.
In a sharp turnaround, NEC projected a 150 billion yen net loss for the year, compared with an original forecast of a profit of
65 billion yen.
NEC shares took a steep dive after the loss announcement, ending the day down 8.81 percent at 973 yen.
($1-119.68 yen)
Gruß Dr. Broemme
NEC Cuts Earnings Outlook, Chip Capacity
By Edmund Klamann
TOKYO (Reuters) - Japan's NEC Corp, the world's third-largest chipmaker, on Friday
warned it would post a net loss this business year, joining a steady stream of electronics firms
cutting earnings forecasts as the global economy worsens.
The company also announced a new series of restructuring steps, including
300 job cuts at a California chip plant and the closure of a semiconductor
line in southern Japan, aiming to get its chip business back in the black in
the next business year.
``We believe our structural reforms will steer us toward a firm recovery in
our earnings next year and beyond,'' NEC President Koji Nishigaki told a
news conference.
The company cut its forecast for consolidated operating profit for the year
to next March to 30 billion yen ($250 million) from an April forecast of
210 billion yen, and projected a 150 billion yen net loss for the year
compared with an original forecast of a 65 billion yen profit.
Like Japan's other chipmaking conglomerates, NEC was hit hard by this year's severe downturn in the semiconductor market
-- the worst ever -- with dynamic random access memory (DRAM) chip operations alone accounting for 80 percent of the
expected 100 billion yen loss in its electronic device division.
Jitters about an imminent profit warning had weighed heavily on NEC shares in recent weeks.
The company's share price is off more than 50 percent since the start of the year, exceeding declines at Japan's other
chipmaking conglomerates.
The profit warning sent NEC's shares tumbling further in late afternoon trade on Friday to their lowest since November 1998.
They closed 8.8 percent lower on the day at 973 yen.
The benchmark Nikkei average ended up 0.81 percent.
CONSERVATIVE VIEW
Nishigaki said the attacks on New York and Washington landmarks earlier this month had dealt an unexpected blow to the
company's outlook, but played down the possibility that the latest figures might require a further downward revision.
``We have taken a very conservative view, so unless things get considerably worse, I think we'll be able to stick with this,'' he
said.
NEC is the last of Japan's five major electronics firms to revise its full-year forecasts since signs emerged late in the spring that
this year's chip slump would be deeper and longer-lasting than expected.
The company said it now expects a net loss of 30 billion yen in the half-year to September, after revising original six-month
forecasts once in July to a three billion yen profit.
NEC also said Elpida Memory Inc, a 50-50 joint venture with Hitachi Ltd that is set to take over NEC's DRAM operations
over the next three years, would delay the start of production until next October. It had originally planned to begin output by the
spring.
NEC has been producing a steady stream of restructuring announcements in recent weeks as it seeks to bolster profitability in
the face of the market's downturn.
On Tuesday, it announced plans to integrate its electronic components operations with a parts-making affiliate, while Friday's
announcement included plans for a 15 percent cut in wafer processing capacity by the end of the business year compared with
last year's levels.
A spokesman said the additional job cuts in California, however, would not result in an increase in the target, set in July, for
4,000 job reductions in the current business year for the NEC group as a whole.
($1-119.68 Yen)
Friday September 28, 7:08 am Eastern Time
Sony Cuts Outlook as Sales Slump
TOKYO (Reuters) - Sony Corp, the world's biggest maker of audio-visual equipment, said
on Friday that slumping sales in the United States and restructuring charges would push its
net profit even lower than it had expected.
Consolidated operating income for the
business year next March is now expected to be $1 billion instead of the
$2.1 billion projected in a previous revision in July.
The sales outlook for 2001/02 was pared back to $63.1 billion from
$64.8 billion.
``From the outlook in April, the current situation has turned much more
severe,'' said Teruhisa Tokunaka, Sony's chief financial officer, echoing
words used by Japan's electronics companies as they announced recent
outlook revisions and restructuring steps.
In after-hours trading on Instinet, Sony shares were changing hands at
4,350 yen, down 40 yen or 0.09 percent from Friday's close in Tokyo of
4,390 yen.
Chairman Nobuyuki Idei and President Kunitake Ando were set to speak at 5 p.m (4:00 a.m. EDT).
Japan's electronics companies have issued a slew of downward revisions to earnings forecasts in recent weeks as the infotech
slump drags on longer than expected. The outlook has been further clouded by the air attacks on U.S. landmarks earlier this
month.
Tokunaka said the revised outlook took into account the potential impact from the attacks in New York and Washington.
Masayuki Yonezawa, analyst at BNP Paribas, said Sony's group operating profit forecast was much lower than analysts'
projections of 180 billion to 200 billion yen.
``This goes to show that the company is expecting very tough times in the Christmas holiday season,'' he said.
In a bid to streamline its business, Sony also plans to incur a total restructuring cost of 50 billion yen for this business year,
including 20 billion yen from additional restructuring of its group operations.
Sony said it would aim to cut annual materials cost by more than 15 percent in the year ending March from the previous year.
As a result, Sony said its group net profit would total 10 billion yen for the year ending next March, sharply down from its July
estimate of 90 billion yen. This is also down 40 percent from its actual profit the previous year.
Just hours before Sony's announcement, NEC Corp, the world's third-largest chipmaker, issued loss warnings.
In a sharp turnaround, NEC projected a 150 billion yen net loss for the year, compared with an original forecast of a profit of
65 billion yen.
NEC shares took a steep dive after the loss announcement, ending the day down 8.81 percent at 973 yen.
($1-119.68 yen)
Gruß Dr. Broemme
