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NEC has weak financial quarter due to increased competition

The generally upward trend for fourth quarter results makes the rough quarter by NEC that much more noteworthy. They still made a profit of $179.8 million for the last quarter of 2005, but that was down 47% from the same quarter the previous year. Some of that difference can be explained by the fact that the company booked gains from the listing of its memory chip affiliate in 2004, but even excluding that the results weren’t good. Operating profit was down 8.1% to $172.8 million. That happened even as revenue increased by 2.6% to $9.9 billion.

The downward trend is driven by a slump in the semiconductor and phone business that has gripped the company. They have been losing market share in their own Japanese handset market due to increasing competition. The worldwide decrease in handset prices certainly hasn’t helped their fortunes, either. The company’s chip subsidiary, NEC Electronics, posted a net loss of $22.2 million due to decreasing demand for their chips and falling prices.

About T.O. Whenham

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