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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (9209)	1/10/2001 12:13:42 PM
From: Kenneth E. Phillipps	Respond to of 14638

NEC Corp. to Offer Shares in Network Chip Business (Update4) By Minoru Matsutani Tokyo, Jan. 10 (Bloomberg) -- NEC Corp., the world's third- biggest chipmaker, said it will turn a division that makes processors for network equipment into a wholly owned subsidiary as early as October, in preparation for taking the unit public. The unit will oversee design, development and sales of chips for mobile phone handsets and optical communications equipment, NEC spokesman Aston Bridgman said. The move follows competitors Nortel Networks Corp.'s and Lucent Technologies Inc.'s plans to offer shares in component businesses. By spinning off fast-growing divisions, companies can raise money on stock markets, making it easier to acquire rivals through share swaps. ``It's (a) special, high-technology division,'' said Scott Foster, a senior analyst at Lehman Brothers Japan Inc., who rates NEC shares ``buy.'' ``It gives investors a real way to play NEC's expertise.'' Nortel Chief Executive John Roth in September said the Canadian company will sell shares in its fiber-optic components unit by next year. Lucent is taking Agere Systems Inc., a semiconductor and fiber-optic components unit, public in April. Lucent expects the share sale to yield $2.5 billion. NEC plans to expand its communications equipment business through mergers and acquisitions. NEC president Koji Nishigaki last July said that the company will spend 600 billion yen ($5.17 billion) over the next three years to buy small companies in the U.S. and Japan with advanced technology in optical network systems, chip design and related areas. NEC shares fell 12 percent last year, outpacing the 28 percent decline of the TOPIX Electric Appliances Index. Rival Fujitsu Ltd., the second-worst performer of Nikkei 225 stock average last year, fell 60 percent in the period. Faster Chips The Tokyo-based company also aims to build competitiveness in the communications chip business by concentrating resources on this area and speeding decision making by separating the unit from its parent. Growth in Internet traffic via mobile phones and computers is creating demand for faster chips to run communications equipment. NEC expects global sales of chips for mobile phones and communication networks to double to 2 trillion yen in 2005 from last year. NEC will provide the 12 billion yen in capital for the new subsidiary, which it plans to take public in three years, Bridgman said. The subsidiary, which aims to triple its sales to 300 billion yen in 2005 from this year, will contract with NEC's plants in Japan to make the chips, Bridgman said. NEC shares rose 0.5 percent to 2,130 yen. Access More Information and Services Above ©2001 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks.