Feeds

NEC could ditch telecoms services unit

Japanese giant slimming down

Internet Security Threat Report 2014

Ailing Japanese IT giant NEC could be set to jettison yet more of its business and move further from the mobile space after reports suggested its ready to sell subsidiary NEC Mobiling for up to $850 million.

NEC Mobiling designs and builds telecoms infrastructure equipment, operates a repair and maintenance service for mobile handsets, and runs a Japan-wide network of mobile phone shops reselling carrier devices.

Unnamed “industry and financial sources” told Reuters that NEC is looking for ¥70 to 80 billion ($US742 million - $US848 million) for the business, with domestic rivals Marubeni and TD Mobile – a joint venture between Toyota and auto-parts biz Denso – both interested in NEC’s 51 per cent stake.

NEC has been undergoing some pretty drastic restructuring over the past 12 months as it looks to turn around its fortunes.

After losses in excess of $1.3bn in fiscal 2012, the IT giant announced plans to shed around 10,000 jobs, and has been streamlining the business through selling its shares in Lenovo, as well as flogging a heap of flat panel patents to Hon Hai (aka Foxconn).

Ironically, one of the few parts of the business in its doom-laden report of January 2012 doing well was carrier networks.

However, according to Forrester analyst Bryan Wang, even this area has become increasingly difficult to make money in thanks to competition from foreign rivals like Huawei, Alcatel and Nokia Siemens Networks.

“The opportunity for local vendors like Fujitsu and NEC is shrinking. The Japanese market is mature and NEC is not actively gaining market share,” he told The Reg. “[Offloading NEC Mobiling] makes business sense. It’s a part of the natural process for Japanese technology companies, moving away from their non-core business.”

The question remains whether NEC’s failing Mobile Terminal Business will follow suit.

Smartphone shipments were hit hard last year by the rise of foreign invaders such as Apple and Samsung. In fact, research from market watchers Counterpoint said foreign brands captured more than 50 per cent of the Japanese market for the first time last year.

Tellingly, NEC was not even mentioned in that report.

With NEC forecast to post a $100bn profit this financial year, there is less pressure on it to ditch the mobile phone division, but it will have to make its mind up eventually, according to Wang.

There’s significant competition now and a lot of pressure on local vendors. It’ hard for them to spend more R&D on innovating so they’re losing out in the smartphone game,” he added.

“I’m not saying it’ll happen soon, but ultimately NEC will have to rethink its strategy here.”

NEC couldn't immediately be reached for comment. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.