NEC Announces Measures Reflecting Financial Results Of the Year Ending March 2001

- Immediate Measures and Continuous Structural Reforms -



Apr 26, 2001, 01:00 ET from NEC Corporation

    TOKYO, April 26 /PRNewswire/ -- NEC Corporation (Nasdaq:   NIPNY) announced
 today its financial results, showing increase in sales and profit for the
 second consecutive term.  The financial result reflects the innovative
 corporate restructuring carried out over the last two years, including focus
 and shift to growing business areas through selection and focus,
 reorganization, reinforcement of corporate governance, restructuring of severe
 businesses, and reformation of affiliated companies.   However, in order to
 overcome the rapid changes in the PC-related market (namely in the area of PC,
 DRAM and display) and the downturn of the economic conditions, NEC will
 accelerate structural reform by implementing the following immediate measures:
 
     I.  Change to a business structure which will promptly adjust to the
         rapidly changing market
 
     A.  Reform domestic PC business structure
           In order to integrate the value chain and adjust promptly to the
           rapidly changing PC market, NEC will reform the domestic PC business
           structure through reorganizing and integrating procurement,
           development/production, and sales functions, and reinforce business
           responsibilities.
 
     i.  In order to improve overall efficiency of the total supply chain
         management system, NEC will integrate divisions and manufacturing
         affiliate companies responsible for development and manufacturing of
         PCs (namely NEC Yonezawa, Ltd., NEC Gunma, Ltd., NEC Data Terminals,
         Ltd. and PC related divisions of NEC Niigata, Ltd.), and establish a
         new development/manufacturing company, DMS(Design engineering,
         Manufacturing & Service).  The new company will provide development,
         manufacturing, parts procurement, quality assurance and customer
         service and support for the domestic PC market by:
           -- integrating product development resources to strengthen
              technology development
           -- integrating worldwide procurement activities to strengthen
              procurement capabilities
           -- cutting costs and lead-time of repair services, and contribute to
              customer satisfaction
         The new company is estimating sales of approximately 550 billion Yen
         in the first fiscal year with approximately 2,000 employees.  The
         company will eventually expand its business outside NEC Group, and
         expects to achieve external sales of approximately 60 billion Yen (10%
         of total sales) in Fiscal 2004 (year ending March 30, 2004).
 
     ii. NEC will strengthen marketing and sales functions of NEC Personal
         Systems, Ltd. (affiliate company responsible for sales of personal
         computer products) to offer consistent services, from product planning
         to inventory controls.  NEC will further concentrate on creating new
         business by offering new services using IT and the customer-base in
         the area of consumer PCs.
         NEC will continue to sell  PCs for enterprise users, to enhance
         synergy with the SI business.
 
             Some of these reforms have already been implemented.  NEC expects
             to implement all remaining reforms within the first half of this
             fiscal year.
 
     B.  Transfer of laser printer business
             NEC will transfer all of its laser printer business from
             development, sales and maintenance services, including business
             activities of NEC Niigata, Ltd. to Fuji Xerox, Co. Ltd.  Through
             this transaction, Fuji Xerox will achieve top class share in the
             domestic laser printer market, and further growth in the market is
             expected towards the future.
 
     C.  Improving profitability of DRAM business
             NEC will shift the activities of current semiconductor production
             lines to Non-DRAM business, except for NEC Hiroshima, Ltd. which
             produces DRAM under contract with Elpida Memory, Inc.   As
             announced earlier, NEC Electronics Inc. (Roseville, California),
             the semiconductor production plant in North America will withdraw
             from DRAM production cutting 700 of its workforce, and shift to
             production of system LSI for North American market.  NEC
             Semiconductors (UK) Ltd., the plant in Scotland, will also shift
             to system LSI production.
 
             Elpida will aim to improve profitability by focusing on high value
             added DRAM market for application specific products such as
             workstations, servers, mobile phones and other personal products.
 
     D.  Improving profitability of display business
             NEC will withdraw from LCD production for notebook PCs and PC
             monitors, and outsource production to Chi Mei Optoelectronics
             Corporation in Taiwan.   NEC's production facilities will
             concentrate on small LCD for mobile phones, monitors for
             industrial use, and large screen high-resolution monitors.
 
         While promoting the merger activities in organic electro
         luminescence business and PDP business, NEC will reform its production
         structure by positioning NEC Akita, Ltd. as the core production
         facility for LCDs and NEC Kagoshima, Ltd. for color PDP.   NEC expects
         to continue restructuring of display business, shifting resources to
         areas where NEC could establish prominent positions with in-house
         advanced technology, and seeking for opportunities of partnership with
         other companies to share know-how and resources.
 
     II. Measures to reduce material costs
         In order to promote cost reductions, each in-house company will
         organize special project to implement the following:
 
     A.  Enhancement of development procurement, aiming to innovate the design
         process and to reduce the number of parts
     B.  Enhancement of strategic procurement through worldwide consolidation
         of procurement activities, and reduction of suppliers by as much as
         30%
     C.  e-Procurement, starting with the use of "Pegasus" (new corporate
         procurement infrastructure) introduced April,2001
 
         Starting with these immediate measures announced today, NEC aims to
         increase its business competence in the near term.  NEC also realizes
         that the key management issue in order to win in the global
         competition is to advance further on with the selection and focus of
         business activities, shifting resources towards growing business.  NEC
         has already announced and implemented various structural reform
         measures.  In the process of mid-term planning in the new fiscal year,
         NEC intends to clarify the focus business areas, elaborate growth
         scenarios and milestones, and continue implementation of corporate
         structural reform measures.
 
         Although tough market condition is suspected to endure still, NEC will
         proceed with the challenge to achieve continuous business growth based
         on its strong competitiveness.
 
     CAUTIONARY STATEMENTS:
       The above forecasts are forward-looking statements involving risks and
       uncertainties. The important factors that could cause actual results to
       differ materially from such statements include, but are not limited to,
       general economic conditions in NEC's markets, which are primarily
       Japan, North America, Asia and Europe; demand for, and competitive
       pricing pressure on, NEC's products in the marketplace; NEC's ability to
       continue to win acceptance of its products in these highly competitive
       markets; and movements of currency exchange rates, particularly the rate
       between the yen and the U.S. dollar in which NEC makes significant
       sales.
 
       In case where the information contained in this supplement falls within
       the definition of "Material Information" under the Securities and
       Exchange Law, Article 166, Paragraph 2, if you read this supplement
       before the time of "Publication" (which is defined under the Securities
       and Exchange Law and its Enforcement Ordinance as twelve hours after its
       release; i.e., approximately 3:30 am on April 27, 2001 (JST)), you and
       the persons listed below may be prohibited from purchasing, selling, or
       making other transactions of shares of stock or other securities of NEC
       before the time of Publication.
 
       Other directors or employees of your company if the content of this
       press release comes to their knowledge in connection with their duty.
 
     *Summary of consolidated financial results is available by accessing the
 NEC Web site at http://www.nec.com.
 
                         Overview of structural reforms
 
     I.   Enhancement of key business at NEC Solutions
          i.  Structural changes for its enhancement of solution business
              (April 2001)
               -- Establishment of IT Solution Marketing Division
               -- Establishment of Solution R&D Division
               -- Reorganization of regional  sales units
          ii.  Enhancement of solutions business by mergers of group companies
               -- Integration of five NEC affiliated companies to establish NEC
                  Nexsolutions, Ltd. (April 2001)
               -- Enhancement of NEC Information Systems, Ltd. (April 2001)
               -- Reorganization of NEC Software companies (Scheduled in
                  October 2001)
 
     II.  Second stage of structural reforms at NEC Networks
          i.  Structural changes aiming to strengthen solution providing
              capability (April 2001)
              -- Re-organized the products oriented business structure into two
                 new operations units: Product operations unit & solution
                 operations unit.
              -- Strengthened its solution providing capability by forming
                 market oriented units.
          ii. Aiming for independent business operation, establishment of NEC
              Toshiba Space System, Ltd. (April 2001)
 
     III.     Enhancement of Solution oriented structure at NEC Electron
              Devices
              i.  Structural changes aiming to strengthen its device solution
                  business (April 2001)
                  -- Establishment of Device SI Business Development Division
                  -- Reorganizing European sales force from regionally-oriented
                     to applications-oriented structure
 
     IV.      Corporate measures to promote reorganization
              i.  Strengthen NEC's technology base
                  -- Established R&D Committee to accelerate corporate
                     strategic R&D
                  -- Concentrate NEC Laboratories' resources to focus business
                     areas
                  -- Selection and focus of seed research areas (Nano
                     technologies, environment, and biotechnology)
              ii. Re-organize NEC Group's production structure
                  -- Established NEC Production Systems, Ltd. (April 2001)
                  -- Review the status of each production affiliates and
                     reinforce production function
              iii. Utilize advanced information technology to strengthen
                   business competitiveness
                   -- Established Corporate IT Division (April 2001)
                   -- Assign CIOs in each in-house Company management to
                      promote Company IT strategy
                   -- Innovate global management infrastructure (Enhancement of
                      customer relations management, supply chain management,
                      product lifecycle management and knowledge management)
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X69559972
 
 

SOURCE NEC Corporation
    TOKYO, April 26 /PRNewswire/ -- NEC Corporation (Nasdaq:   NIPNY) announced
 today its financial results, showing increase in sales and profit for the
 second consecutive term.  The financial result reflects the innovative
 corporate restructuring carried out over the last two years, including focus
 and shift to growing business areas through selection and focus,
 reorganization, reinforcement of corporate governance, restructuring of severe
 businesses, and reformation of affiliated companies.   However, in order to
 overcome the rapid changes in the PC-related market (namely in the area of PC,
 DRAM and display) and the downturn of the economic conditions, NEC will
 accelerate structural reform by implementing the following immediate measures:
 
     I.  Change to a business structure which will promptly adjust to the
         rapidly changing market
 
     A.  Reform domestic PC business structure
           In order to integrate the value chain and adjust promptly to the
           rapidly changing PC market, NEC will reform the domestic PC business
           structure through reorganizing and integrating procurement,
           development/production, and sales functions, and reinforce business
           responsibilities.
 
     i.  In order to improve overall efficiency of the total supply chain
         management system, NEC will integrate divisions and manufacturing
         affiliate companies responsible for development and manufacturing of
         PCs (namely NEC Yonezawa, Ltd., NEC Gunma, Ltd., NEC Data Terminals,
         Ltd. and PC related divisions of NEC Niigata, Ltd.), and establish a
         new development/manufacturing company, DMS(Design engineering,
         Manufacturing & Service).  The new company will provide development,
         manufacturing, parts procurement, quality assurance and customer
         service and support for the domestic PC market by:
           -- integrating product development resources to strengthen
              technology development
           -- integrating worldwide procurement activities to strengthen
              procurement capabilities
           -- cutting costs and lead-time of repair services, and contribute to
              customer satisfaction
         The new company is estimating sales of approximately 550 billion Yen
         in the first fiscal year with approximately 2,000 employees.  The
         company will eventually expand its business outside NEC Group, and
         expects to achieve external sales of approximately 60 billion Yen (10%
         of total sales) in Fiscal 2004 (year ending March 30, 2004).
 
     ii. NEC will strengthen marketing and sales functions of NEC Personal
         Systems, Ltd. (affiliate company responsible for sales of personal
         computer products) to offer consistent services, from product planning
         to inventory controls.  NEC will further concentrate on creating new
         business by offering new services using IT and the customer-base in
         the area of consumer PCs.
         NEC will continue to sell  PCs for enterprise users, to enhance
         synergy with the SI business.
 
             Some of these reforms have already been implemented.  NEC expects
             to implement all remaining reforms within the first half of this
             fiscal year.
 
     B.  Transfer of laser printer business
             NEC will transfer all of its laser printer business from
             development, sales and maintenance services, including business
             activities of NEC Niigata, Ltd. to Fuji Xerox, Co. Ltd.  Through
             this transaction, Fuji Xerox will achieve top class share in the
             domestic laser printer market, and further growth in the market is
             expected towards the future.
 
     C.  Improving profitability of DRAM business
             NEC will shift the activities of current semiconductor production
             lines to Non-DRAM business, except for NEC Hiroshima, Ltd. which
             produces DRAM under contract with Elpida Memory, Inc.   As
             announced earlier, NEC Electronics Inc. (Roseville, California),
             the semiconductor production plant in North America will withdraw
             from DRAM production cutting 700 of its workforce, and shift to
             production of system LSI for North American market.  NEC
             Semiconductors (UK) Ltd., the plant in Scotland, will also shift
             to system LSI production.
 
             Elpida will aim to improve profitability by focusing on high value
             added DRAM market for application specific products such as
             workstations, servers, mobile phones and other personal products.
 
     D.  Improving profitability of display business
             NEC will withdraw from LCD production for notebook PCs and PC
             monitors, and outsource production to Chi Mei Optoelectronics
             Corporation in Taiwan.   NEC's production facilities will
             concentrate on small LCD for mobile phones, monitors for
             industrial use, and large screen high-resolution monitors.
 
         While promoting the merger activities in organic electro
         luminescence business and PDP business, NEC will reform its production
         structure by positioning NEC Akita, Ltd. as the core production
         facility for LCDs and NEC Kagoshima, Ltd. for color PDP.   NEC expects
         to continue restructuring of display business, shifting resources to
         areas where NEC could establish prominent positions with in-house
         advanced technology, and seeking for opportunities of partnership with
         other companies to share know-how and resources.
 
     II. Measures to reduce material costs
         In order to promote cost reductions, each in-house company will
         organize special project to implement the following:
 
     A.  Enhancement of development procurement, aiming to innovate the design
         process and to reduce the number of parts
     B.  Enhancement of strategic procurement through worldwide consolidation
         of procurement activities, and reduction of suppliers by as much as
         30%
     C.  e-Procurement, starting with the use of "Pegasus" (new corporate
         procurement infrastructure) introduced April,2001
 
         Starting with these immediate measures announced today, NEC aims to
         increase its business competence in the near term.  NEC also realizes
         that the key management issue in order to win in the global
         competition is to advance further on with the selection and focus of
         business activities, shifting resources towards growing business.  NEC
         has already announced and implemented various structural reform
         measures.  In the process of mid-term planning in the new fiscal year,
         NEC intends to clarify the focus business areas, elaborate growth
         scenarios and milestones, and continue implementation of corporate
         structural reform measures.
 
         Although tough market condition is suspected to endure still, NEC will
         proceed with the challenge to achieve continuous business growth based
         on its strong competitiveness.
 
     CAUTIONARY STATEMENTS:
       The above forecasts are forward-looking statements involving risks and
       uncertainties. The important factors that could cause actual results to
       differ materially from such statements include, but are not limited to,
       general economic conditions in NEC's markets, which are primarily
       Japan, North America, Asia and Europe; demand for, and competitive
       pricing pressure on, NEC's products in the marketplace; NEC's ability to
       continue to win acceptance of its products in these highly competitive
       markets; and movements of currency exchange rates, particularly the rate
       between the yen and the U.S. dollar in which NEC makes significant
       sales.
 
       In case where the information contained in this supplement falls within
       the definition of "Material Information" under the Securities and
       Exchange Law, Article 166, Paragraph 2, if you read this supplement
       before the time of "Publication" (which is defined under the Securities
       and Exchange Law and its Enforcement Ordinance as twelve hours after its
       release; i.e., approximately 3:30 am on April 27, 2001 (JST)), you and
       the persons listed below may be prohibited from purchasing, selling, or
       making other transactions of shares of stock or other securities of NEC
       before the time of Publication.
 
       Other directors or employees of your company if the content of this
       press release comes to their knowledge in connection with their duty.
 
     *Summary of consolidated financial results is available by accessing the
 NEC Web site at http://www.nec.com.
 
                         Overview of structural reforms
 
     I.   Enhancement of key business at NEC Solutions
          i.  Structural changes for its enhancement of solution business
              (April 2001)
               -- Establishment of IT Solution Marketing Division
               -- Establishment of Solution R&D Division
               -- Reorganization of regional  sales units
          ii.  Enhancement of solutions business by mergers of group companies
               -- Integration of five NEC affiliated companies to establish NEC
                  Nexsolutions, Ltd. (April 2001)
               -- Enhancement of NEC Information Systems, Ltd. (April 2001)
               -- Reorganization of NEC Software companies (Scheduled in
                  October 2001)
 
     II.  Second stage of structural reforms at NEC Networks
          i.  Structural changes aiming to strengthen solution providing
              capability (April 2001)
              -- Re-organized the products oriented business structure into two
                 new operations units: Product operations unit & solution
                 operations unit.
              -- Strengthened its solution providing capability by forming
                 market oriented units.
          ii. Aiming for independent business operation, establishment of NEC
              Toshiba Space System, Ltd. (April 2001)
 
     III.     Enhancement of Solution oriented structure at NEC Electron
              Devices
              i.  Structural changes aiming to strengthen its device solution
                  business (April 2001)
                  -- Establishment of Device SI Business Development Division
                  -- Reorganizing European sales force from regionally-oriented
                     to applications-oriented structure
 
     IV.      Corporate measures to promote reorganization
              i.  Strengthen NEC's technology base
                  -- Established R&D Committee to accelerate corporate
                     strategic R&D
                  -- Concentrate NEC Laboratories' resources to focus business
                     areas
                  -- Selection and focus of seed research areas (Nano
                     technologies, environment, and biotechnology)
              ii. Re-organize NEC Group's production structure
                  -- Established NEC Production Systems, Ltd. (April 2001)
                  -- Review the status of each production affiliates and
                     reinforce production function
              iii. Utilize advanced information technology to strengthen
                   business competitiveness
                   -- Established Corporate IT Division (April 2001)
                   -- Assign CIOs in each in-house Company management to
                      promote Company IT strategy
                   -- Innovate global management infrastructure (Enhancement of
                      customer relations management, supply chain management,
                      product lifecycle management and knowledge management)
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X69559972
 
 SOURCE  NEC Corporation