NEC on Friday said it would cut 20,000 jobs worldwide as the economic recession in the fourth quarter of 2008 took a heavy toll across the manufacturer's businesses from information technology and PCs to mobile and electronic devices.
The Japanese company said the job cuts would be about evenly split between Japan and overseas. The reduction is expected to reduce costs by 80 billion yen, or $889.6 million, over the next two years.
The company pinned its financial troubles on the economic recession that caused a slowdown in spending among businesses and consumers, particularly in developed countries such as the United States and Europe. Spending also slowed in Japan, NEC said.
"The worsening financial environment resulted in decreased exports to developed countries and low consumption, thereby contributing to the spread of a simultaneous worldwide recession," the company said in a statement. NEC also said the strong yen contributed to its financial woes.
For the fiscal third quarter ended Dec. 31, NEC said its net loss soared to 130 billion yen, or $1.45 billion, from 5.2 billion yen, or $57.8 million, during the same period a year ago. Revenues for the quarter fell nearly 10% to 948 billion yen, or $10.5 billion, from 1.05 trillion yen, or $11.7 billion.
The company lowered its forecast for the full fiscal year that runs through March to a net loss of 290 billion yen, or $3.2 billion. The company had forecast in October a net profit of 15 billion yen, or $166.8 million. The company also cuts its sales forecast to 4.2 trillion yen, or $46.7 billion, from 4.6 trillion yen, or $51.2 billion.
Meanwhile, Reuters news agency reported Friday that NEC was in talks with Toshiba on a partial merger of their respective chip operations. Such a combined business would have the potential of being bigger than Samsung Electronics' semiconductor unit.