NEC Quarterly Profit Surges on Display Patent Sales, Cost Cuts
NEC Corp. (6701), a Japanese maker of wireless stations, boosted second-quarter profit 38 percent on the sale of display panel-related patents and cost cuts.
Net income rose to 25.9 billion yen ($324 million) for the three months ended Sept. 30 from 18.7 billion yen a year earlier, the Tokyo-based company said in a statement today. NEC sold the patents to a Hon Hai Precision Industry Co. (2317) unit for 9.45 billion yen, Taipei-based Hon Hai said Sept. 28.
NEC has cut about 10,000 jobs, or about 8.6 percent of its workforce, since January to meet its target of reporting a full- year profit for the first time in three years. The maker of LaVie computers sold its entire 2.7 percent stake in Lenovo Group Ltd. (992) for 18 billion yen, resulting in a gain of about 4 billion yen, it said in September.
Sales rose 5.4 percent to 816.3 billion yen in the second quarter, NEC said. Operating profit was 55.2 billion yen, compared with 26.2 billion yen a year earlier.
The company kept its full-year earnings forecast unchanged, citing uncertainties about the global economic outlook. Net income may total 20 billion yen for the year ending March 31, compared with a loss of 110.3 billion yen a year earlier, it said in April. That compares with the 25.4 billion-yen average of estimate of 10 analyst estimates compiled by Bloomberg.
Sales may rise 3.7 percent to 3.15 trillion yen, and operating profit may jump 36 percent to 100 billion yen, NEC said.
NEC was unchanged at 140 yen in Tokyo trading before the earnings announcement. The stock has fallen 10 percent this year, compared with a 5.7 percent gain by Japan’s benchmark Nikkei 225 Stock Average.
The company allocated 20 billion yen to develop a new business and to strengthen its overseas and energy-related operations, it said in April.
NEC completed the purchase of the information-management business of Convergys Corp. (CVG) for $449 million in May. The company formed a partnership 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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