NEC doubles H1 profit estimate as chipmakers shine
TOKYO, Aug 25 (Reuters) - Electronics heavyweight NEC Corp on Friday doubled its estimate for half-year group net profit -- the second Japanese chipmaker to lift its forecasts this week on booming cell phone and personal computer demand.
Snapping at the heels of rival Toshiba Corp, NEC said it expected an extra 100 billion yen ($936.2 million) in revenue for the April-September period to result in a 20 billion yen net profit.
Although still a small amount for a company of its size, it is a substantial improvement on the 48.85 billion yen net loss for the same period a year ago and a May forecast of 10 billion.
``I think we can set ourselves a strong target for the second half of the year as well,'' company president Koji Nishigaki said at a news conference.
He said healthy prices for DRAM chips had offset a drop off in demand for colour liquid crystal displays and a weak start to new system integration services.
Roaring demand for semiconductors on a worldwide info-tech boom has also provided extra earnings backbone for Toshiba. NEC and Toshiba are respectively the world's second and third largest chipmakers, behind U.S. giant Intel Corp
NEC shares rose higher on the announcement to close up 100 yen or 3.33 percent at 3,100.
On Monday Toshiba said it had boosted its group net profit outlook for the full business year ending March 31 to 135 billion yen, 35 percent higher than an earlier forecast and a strong turnaround from a 28 billion yen loss a year ago.
That has resulted in nine percent climb in Toshiba's shares this week to 1,124 yen.
NEC did not say issue revision for full year estimates but said it may revise the numbers when interim results are announced in October. In May it predicted group net profit of 75 billion yen for the year to end-March, compared with 10.42 billion yen a year earlier.
Robust chip demand is not expected to peter out anytime soon.
``I expect to continue for all of next year,'' said Morgan Stanley Dean Witter analyst Takatoshi Yamamoto. ``Even when chip demand for mobile phones and computers starts to slow, growth in digital devices should offset this.''
Yamamoto rates both NEC and Toshiba outperform, with target prices of 3,510 yen and 1,450 but added that while Toshiba was making up a lot of ground in the short-term, NEC's aggressive management made it more interesting investment long-term.
NEC said in June it plans one trillion yen in capital spending and an extra 600 billion yen to fund acquisitions over three years in its drive to become the world's number one firm in mobile networking.
As part of that strategy, NEC also announced on Friday it would raise its holding in phone making unit Nitsuko Corp to 53 percent from 34 percent.
News that the two companies planned to reorganise their business came before the Tokyo stock market closed on Friday, inspiring late buying in Nitsuko.
Nitsuko shares surged as high as 680 yen, up 11.66 percent, before ending the Friday session 4.27 percent higher at 635 yen.
Under Nishigaki's leadership NEC has staged a sharp recovery, returning to profit in the last business year after bailing out of its money-losing U.S. personal computer unit Packard Bell. |
