For its fiscal year ended March 31, NEC’s total operations earned a profit of 12.14bn yen, or roughly $110,06m, down from 77.2bn yen, or roughly $699.63m, in the previous year.
Total NEC group sales grew slightly, by 0.5%, to roughly $37.7bn.
The company hopes to narrow its losses at its mobile phone unit by selling fewer models and cutting costs.
NEC’s mobile phone operation lost about $226.24m, due to price erosion in markets outside of Japan. The unit also suffered costs for lowering excess inventory in China and increased product development.
We have since lowered the inventory level in China to an appropriate level and improved the sales channel, completing the foundation for turnaround in China, said NEC spokesperson Kazuko Andersen via e-mail.
We will also focus on profitability by narrowing the number of models and by reducing materials cost to offset price declines, and use product development cost more efficiently, Andersen said.
However, Andersen warned these measures may not bear fruit immediately, but we aim to improve the business by narrowing loss.
NEC expects its mobile terminal business to lose about roughly $135.88m in the first half, it hopes to breakeven in the second half of its fiscal year that ends March 31, 2007, Andersen said.
On the whole, the company expects to grow its total group sales 1.6% to about $44.4bn, based in part on a recovery of its Electron Devices unit. NEC said further cost cutting and healthier sales puts it on track to earn roughly $453m.
Specifically, NEC plans to focus on its growth businesses, such as its networks and systems integration business, while also turning around its underperforming units, Andersen said.
