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NEC slashes 10,000 jobs – blames Thai floods, smartphone slump

Japanese IT giant a victim of Apple's success

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NEC is set to slash 10,000 jobs including 3,000 unlucky employees from its workforce outside of Japan, after its revised forecast revealed the Japanese electronics giant would make a year end net loss of ¥100bn (£820m).

The firm did not reveal exactly where in the business the jobs would go, and said the overseas cuts would be made “in accordance with the review of manufacturing operation”. However, its financial forecast document (PDF) reveals some clues.

It shows a Mobile Terminal Business in dire straits, with smartphone shipments revised down for the year from 6.5 million to 5 million units and delays to the expansion of its overseas business. The success of “foreign vendors' increasing market share in Japan” was also noted, no doubt a reference to the huge impact the iPhone has made in the land of the rising sun.

NEC has also been hit hard by the flooding in Thailand, which virtually submerged two key components factories and strangled its supply of hard disk drives.

It's not the first tech firm to admit it has been affected either, with EMC, Dell, HP and Microsoft all blaming the natural disaster for poor financials and price hikes recently.

As a result, NEC was forced to issue a revised forecast for the fiscal year end which saw put sales at ¥3,1 trillion, ¥150bn less than the previous forecast, and operating and normal income both reduced by ¥20bn yen.

Aside from the job cuts, NEC will also focus investment on the three areas of the business that are actually doing ok: IT services, carrier networks and ‘social infrastructure’, which includes things like digital broadcasting technology and disaster prevention systems.

In doing so, future plans include expanding the LTE, services and smart infrastructure businesses internationally. ®

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