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NEC posts loss, reintegrates compound-semi group

Posted: 27 Jan 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Yoshiko Hara? NEC Electronics?

Japan-based NEC Electronics Corp. posted an operating loss of $61 million and a net loss of $23 million for the fiscal 2005 third quarter on sales of $1.4 billion.

At the same time, the company announced that it would merge NEC Compound Semiconductor Devices Ltd back into the main business. The compound-semiconductor unit was spun off from NEC Corp. as a wholly owned subsidiary in 2001. The integration is expected to help NEC strengthen its system-on-chip business, according to Toshio Nakajima, president and CEO of NEC Electronics.

"In many cases, system-on-chip LSIs are offered together with front-end high-frequency devices. By integrating the compound-semiconductor company, we are going to offer modules that integrate system-on-chip LSIs and high-frequency devices," said Nakajima.

Third-quarter sales came in $17 million below NEC Electronics' October guidance. But the company managed to keep its operating loss below the original guidance of $91 million, helped by an exchange gain of $17 million.

NEC Electronics has been unprofitable since the 2005 fiscal first quarter, which began last April. In October, NEC's president Kaoru Tosaka resigned because of the company's poor fiscal performance.

In the fiscal midyear forecast it delivered in October, NEC projected full-fiscal-year sales of $5.5 billion, a decline of 10 percent from fiscal 2004. The projected fiscal-year operating loss of $287 million would be the first loss since the company went public in 2003. NEC has not changed the forecast.

"We'll do the best to improve the final result, but at the present, there are no big factors that deserve to change the forecast," said Nakajima.

The plunge in NEC Electronics' business this fiscal year was attributed to the failure to bring products to market in a timely manner and to continuing price erosion. Nakajima expects the company to achieve breakeven results in fiscal 2006.

The market for the company's EMMArchitecture system for digital consumer electronics continues to develop. Already, about 30 companies, including Toshiba and Sony, are offering DVD recorders and TVs employing EMMA devices. A new series of microcontrollers will be introduced midyear.

"We expect that these products will steadily increase to contribute to our business the next fiscal year," Nakajima said.

- Yoshiko Hara
EE Times




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