NEC Restructures, to Cut 15,000 Jobs
NEC Corp., Japan’s biggest personal computer and chip maker, said Friday it overhauled its management and will cut 15,000 jobs, or nearly 10% of its work force, over three years as it struggles to recover from slumping sales and massive losses at its Packard Bell unit in the United States.
About 6,000 of the job cuts are outside Japan; the company did not say how many will hit its 7,000 U.S. workers.
The downsizing is the latest corporate fallout from the spreading economic crisis in Asia. But NEC’s woes are also tied to problems endemic to the Sacramento-based Packard Bell unit, which has been hammered by price-cutting wars with U.S.-based makers of personal computers.
NEC said it expects to lose up to $1.25 billion this year amid the Asian slump, a prolonged recession in Japan and the strong yen, which pushes up the price of Japanese products sold abroad. That estimate is well beyond its previous forecast of $292 million. It earned $338 million last year.
To cope with the losses, NEC will slash executives’ salaries by up to 20%, trim capital spending by a fifth, and cut its research and development budget by 10%. NEC will also sell real estate to pay off debt.
Much of the damage flows from red ink outside Japan. The Packard Bell unit lost $500 million last year as its share of U.S. PC sales dropped to 7.1% from 9.4% in 1997, according to research firm Dataquest.
NEC said it will separate the profitable European subsidiary of Packard Bell NEC from the U.S. division, putting the European unit under direct control of the parent company.
In addition, NEC President Hisashi Kaneko will be replaced by Koji Nishigaki, currently a managing director, on March 26.
In other Asian fallout Friday, Toshiba Corp. said the strong yen and a slump in sales hurt earnings.
It said it expects a loss of $167 million this year for the parent company, contrasted with an earlier estimate of a profit of $100 million.
The loss would be the first in 48 years for the parent, which does not include Toshiba’s subsidiaries.
