NEC Corp’s pre-tax loss of $352m was the company’s first consolidated loss in almost 20 years – and the company’s fall in sales, at 6.9%, was non-trivial. According to Reuter, NEC said a major reason for the group loss was huge depreciation charges to write down the value of its chip subsidiaries. The company was particularly exposed to the 1992-93 confluence, because it is a major supplier to the consumer electronics market, it faces stiff competition in its highly-profitable – and way over-priced – personal computers, and its surviving mainframe business, such as it is, was hit by the cuts in capital spending and the move to downsizing. In chips, Intel Corp took over its position as the world’s largest producer. The company expects to report a return to profits of $373m for the year just started – but Japanese companies tend to be very optimistic in their early forecasts and later have to tone them down. NEC acknowledged the soaring yen would create a harsh economic climate, but said the Japanese government’s economic stimulus package would provide a boost, as would an improving computer market. It counts on spending on telecommunications infrastructure and personal computers for schools to create a better picture.
