NEC to cut staff by 4,000
07/31/2001 4:01:48 PM MDT Albuquerque, Nm
By Dustin D. Brand; Owner AMO
DT posted break-even results for it's second quarter.
TOKYO, July 31 - Japan's NEC Corp, the world's third-largest chipmaker, said on Tuesday it would cut 4,000 jobs globally, 2.5 percent of its work force or 4,000 workers.
Drastic job cuts and attempts to reach profitability are nothing new this year as others in Japan and worldwide have made job cuts. Canadian based Nortel just recently made plans to cut an additional 15,000-20,000 workers.
"During this slump, NEC will establish a stable management base and get ready for the global competition and growth that lies ahead," NEC President Koji Nishigaki told a news conference.
NEC ended the day up seven percent at 1,669 yen, its highest close in more than a month.
The shares are down more than 20 percent since the start of the year, underperforming the Nikkei average's <.N225> 14 percent drop but slightly better than most other Japanese chipmaking conglomerates, hit by what NEC executives said could be a 25 percent contraction in the global semiconductor market this year.
The company restated its intention to pull out of the volatile dynamic random access memory (DRAM) chip market, where a tumble in prices since late last year has sent many chipmakers' memory operations, including NEC's, into the red. SDRAM memory is selling at an all-time low.
Over the next three years NEC plans to transfer virtually all of its DRAM operations to Elpida, a DRAM joint venture with Hitachi Ltd <6501.T> that aims to start production at a new state-of-the-art plant next summer.
NEC Senior Managing Director Shigeo Matsumoto said the company had not changed its estimate of 40 billion to 50 billion yen ($320 million-$400 million) in restructuring costs for this business year, although it would have a clearer idea of what the final figure would be when it announces first-half results in October. The company had already announced several restructuring moves in April, including a halt in DRAM production at a facility in California, where it cut 700 jobs.
NEC also said at that time it would sell its laser printer operations and contract out to a Taiwanese firm the production of some of the liquid crystal displays it makes for personal computer monitors. LCD's have been dropping in price drastically due to cheaper manufacturing and increaseing demand with increasing supply.
The company on Friday reported an 834 million yen net profit for the quarter, down 70 percent from a year earlier but managing to stay in the black while compatriots such as Sony Corp <6758.T> and Fujitsu Ltd <6702.T> recorded net losses for the period.
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