NEC's loss widens, plans to cut 20,000 workers

Electronics giant NEC Corp. said it will cut 20,000 workers worldwide to stanch mounting losses, joining a slew of other Japanese corporate heavyweights who are slashing jobs to survive the deepening global downturn.

NEC's net loss for October-December swelled to 130 billion yen ($1.46 billion) from 5.2 billion yen a year earlier as the global slump hit semiconductors and other businesses, it said Friday. Tokyo-based NEC said it would sink into the red for the full year through March, as well.

The job cuts, which include nearly 7 percent of the company's permanent work force, will be completed by March 2010 and are part of a broader plan to restore the company's profitability. NEC also aims to cut 80 billion yen in overhead costs at struggling semiconductor subsidiary NEC Electronics over the next two fiscal years.

Half of the job cuts are to come from NEC's 150,000 permanent employees worldwide, while the remaining 10,000 will be temporary and contract workers.

"With these measures we will seek to improve our fixed costs in order to convert to a more muscular profit structure," company president Kaoru Yano told reporters in Tokyo.

NEC is the latest big-name Japanese company to announce job cuts in an increasingly difficult economy. Government data released Friday showed Japanese companies slashed output at a record pace in December while the jobless rate surged and household spending fell sharply.

Hitachi, which makes everything from home appliances and TVs to medical equipment, said Friday it will cut 7,000 jobs and forecasted a net loss of 700 billion yen ($7.7 billion) for the year through March. Hitachi had about 390,000 employees at the end of last fiscal year in March 2008.

Other high profile companies from Sony to Toyota have already announced layoffs and production cutbacks as the global economic slump hits demand in their key overseas markets.

Toshiba Corp. also expects a loss for the full year, with its electronic devices division "deeply in the red."

A Japanese newspaper reported Friday that NEC was in talks with Toshiba for a possible 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.

NEC declined to confirm the report, saying it was not based on an official company announcement.

NEC said its operations worsened all round, from information technology to mobile and electronic devices, as the company was faced with a deepening global slump and escalating competition in the electronics industry. NEC also blamed the stronger yen for squeezing profits.

Revenue for the fiscal third quarter was down slightly at 948 billion yen from 1.05 trillion yen a year earlier.

By segment, electronic parts and semiconductor operations took the worst beating, with sales falling nearly 30 percent on declining demand for personal computers and display, as well as semiconductors for automobiles. Mobile and networking businesses also suffered because of falling investment by service providers.

NEC now expects a net loss of 290 billion yen for the full fiscal year through March, a steep plunge into the red from the 15 billion yen net profit projected in October. The company also cut its sales estimate to 4.2 trillion yen for the full fiscal year, compared with the previous forecast of 4.6 trillion yen.

NEC shares declined 6.5 percent Friday in Tokyo. The company announced earnings results after trading closed.

Associated Press Writer Jay Alabaster contributed to this report.