(Corrects percentage change in headline and first paragraph.)

April 21 (Bloomberg) -- NEC Corp., Japan's largest maker of personal computers, reported full-year profit slid 81 percent after its chipmaking unit posted a wider-than-expected loss.

Net income in the year ended March 31 fell to 13 billion yen ($111 million) from 67.9 billion yen a year ago, the Tokyo-based company said in a preliminary earnings statement today. NEC, due to report on May 11, had projected a 60 billion yen profit.

NEC, which spun off the NEC Electronics Corp. chipmaking unit in November 2002, said the profit decline was due to a 70 billion yen one-time charge for deferred taxes at the subsidiary. NEC Electronics is forecasting a profit this fiscal year after five straight quarters of losses as it makes more varied semiconductors to drive earnings growth.

``NEC Electronics had to deal with the tax issue sooner or later, but the impact was still greater than I expected,'' said Koichi Fujimoto, an analyst at Okasan Securities Co. in Tokyo. ``Profitability this year is possible, but the company needs to create a business model that can generate profit even'' when conditions in the semiconductor industry worsen.

Sales at NEC fell to 4.8 trillion yen from 4.86 trillion yen a year earlier. The company had expected sales of 4.93 trillion yen. The company didn't provide a figure for operating profit in the preliminary earnings release.

NEC Electronics

NEC Electronics, 70 percent controlled by NEC, reported a net loss of 98 billion yen, wider than the 20 billion yen projected. The operating loss was 36 billion yen, compared with a 33 billion yen loss forecast in October and 33.2 billion yen profit a year ago. Sales fell 8.8 percent to 646 billion yen, less than the 10 percent decline expected earlier.

``The actual operating loss narrowed by 6 billion yen because of a sales gain, signaling an improvement in operating conditions,'' Hiroshi Sato, chief financial officer at NEC Electronics, said at a news conference in Tokyo today.

The unit also booked a 9 billion yen of costs for licenses and technologies purchased from third parties, and set aside provisions to cover possible antitrust violations in the U.S. NEC Electronics is scheduled to report earnings on April 25.

``It is still too early to say whether the improvement in sales will lead to revenue growth this year,'' Fujimoto said.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Daisuke Takato in Tokyo at dtakato@bloomberg.net.

Last Updated: April 21, 2006 06:06 EDT