NEC to Get 130 Billion Yen of Financing, Sell Mobiling
Stock Chart for NEC Corp (6701)
NEC Corp. (6701), a Japanese maker of wireless base stations, will get 130 billion yen ($1.3 billion) of financial support from lenders and sell its stake in a mobile phone sales unit to Marubeni Corp. (8002)
The financial support includes subordinated loans from Sumitomo Mitsui Banking Corp., Development Bank of Japan Inc. and three other lenders, it said in a statement today. The company will sell its stake in NEC Mobiling Ltd. (9430) to Marubeni for 40.8 billion yen, it said.
NEC is reorganizing its operations to focus on corporate services and selling assets as it plans to use today’s loans to strengthen its finances and make strategic investments. The maker of La Vie computers has cut about 10,000 jobs and sold assets including a stake in Lenovo Group Ltd. (992) last year.
The company also said earnings would fall this year, with net income to drop to 20 billion yen in the 12 months ending March from 30.4 billion yen a year earlier. That compares with the 53.2 billion-yen average of nine analyst estimates compiled by Bloomberg.
Shares of NEC fell 7.5 percent to 271 yen at the close of trade in Tokyo, before the announcement was released. The stock has gained 50 percent this year, compared with a 34 percent advance for Nikkei 225 Stock Average.
Chief Financial Officer Isamu Kawashima said the company is experiencing little impact from a weaker yen.
Each one yen move against the U.S. dollar and euro affects annual operating earnings by 300 million yen, he said.
In July, NEC built a common network system at Asahi Group Holdings Ltd. (2502), maker of Super Dry beer, and in December it formed a partnership with Interpol on cyber security. The company teamed with Gutermann AG, a Swiss developer of leak- detection technologies, to jointly develop water management for cities, the two companies said Oct. 23.
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