PC Industry consolidation in the offing? Heads roll at NEC.
Drew:
I don't know whether you recall M.Dell predicting an industry consolidation in the PC business during his various interviews during this past year or so.Well here are some signs of this,looks like the consolidation is starting from Japan.
===============================
NEC To Cut 15,000 Jobs
TOKYO (AP)--NEC Corp., Japan's biggest computer maker, will cut 15,000 jobs, or 9.7 percent of its work force, over the next three years as it struggles to recover from slumping sales and massive losses at its Packard Bell division. About 6,000 of the job cuts will be outside Japan.
NEC also disclosed today it expects to lose $1.25 billion this year and that it was cutting executives' salaries and reducing spending on research and development.
President Hisashi Kaneko will step down, though he denied his resignation was an admission of responsibility for the poor performance.
Koji Nishigaki, currently a managing director, will take over as president on March 26.
Japan's prolonged recession, a rising yen and Asia's economic crisis have battered NEC's profits. A $500 million loss at NEC's Packard Bell division in 1998 was also a huge blow.
NEC said it expects a group net loss of 150 billion yen, or $1.25 billion, this year compared to its previous forecast of a net loss of 35 billion yen, or $292 million. NEC earned 40.51 billion yen last year.
NEC group companies will cut 9,000 jobs in Japan over the next three years and 6,000 jobs overseas. NEC and its 130 subsidiaries employ 155,000 people worldwide.
The company will reduce executives' salaries by between 10 percent and 20 percent, trim capital spending by 20 percent and cut its research and development budget by 10 percent. NEC will also sell real estate to pay off debt.
The company said Packard Bell NEC is expected to post an $80 million loss before taxes this fiscal year because of ''intense price competition'' in the U.S. PC market. NEC predicted the division will earn a profit in 2000.
Elsewhere, Toshiba Corp. said a rising yen and a slump in sales have hurt earnings.
A rising yen makes Japanese products less competitive overseas.
Toshiba said it expects a net loss of 20 billion yen, or $167 million, this year for its parent company, compared to an earlier estimate of a profit of 12 billion yen, or $100 million.
The loss would be the first in 48 years for the parent company, which doesn't include Toshiba's subsidiaries.
(Courtesy:UPside via AustinAmerican via AP)
AP-NY-02-19-99 0827EST
|
