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February 21, 1999


By CBR Staff Writer

NEC Corp, the Japanese electronics giant, plans to cut its worldwide workforce by 15,000 over the next three years after a disastrous year in which it expects to record a net loss of $1.25bn on revenues down 10% to $29.4bn. The company blamed everything from the high value of the yen to economic problems in Asia and South America. NEC said demand for communications products in overseas markets had fallen as had domestic demand for network equipment as well as sales of non-memory semiconductors. But its US subsidiary Packard Bell NEC has yet again proved a liability and NEC has been forced to write off $1.57bn from its investment in the company. Packard Bell NEC is to be reorganized again (see separate story). NEC President Hisashi Keneka is stepping down after taking the blame for the company’s plight but the company had more practical measures lined up to turn its operations around. A total of 9,000 staff at domestic subsidiaries and 6,000 overseas will lose their jobs as NEC cuts back capital investment in the next financial year by 20%. Management expenses will be cut by 10% and NEC will move to lean manufacturing and build-to-order models. The aim is to turn the company around by 2002 when the directors expect to see 9.0% growth rates and sales reaching $49.8bn. NEC sees its future in the integration of computers and communications is turning towards services to give the ailing company a boost. It plans to shift 10,000 staff over the next three years in its systems integration, networking and semiconductor fields. Ironically, semiconductors is one area not blamed by NEC for its plight, although the company has moved to lessen its dependence on memory product into fields such as ASICS and CMOS. While other companies are fighting to attract bright new recruits, NEC is only taking on 555 graduates and freezing recruitment at group companies, apart from some software-based operations.

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