NEC swings to profit in second quarter

Japanese electronics giant NEC Corp. said Thursday it swung to a quarterly profit from a year earlier when special losses dragged it into the red but earnings from business operations slipped.

The Tokyo-based company said net profit for July-September was 1.3 billion yen ($13 million) compared with a 5.8 billion yen loss in the same period last year, when it booked special losses for faulty products.

NEC said sales of large computer network systems to domestic telecoms companies fell, while revenue from abroad was hurt by the stronger yen. It also cited lower sales of personal computers and semiconductors.

Overall revenue for the fiscal second quarter was flat at 1.12 trillion yen ($11 billion) and operating profit fell due to higher sales costs and operating expenses.

Last week, NEC slashed its full-year earnings estimates, blaming weaker demand for mobile phones and computer chips.

NEC targets sales of 4.6 trillion yen and a net profit of 15 billion yen.

On Thursday, the company also said it was postponing payment of its midterm dividend and it was undecided on whether to pay a year-end dividend. The company had earlier forecast both dividend payments would be 4 yen, for a total annual payment of 8 yen.

NEC blamed the downturn in the stock market for the dividend postponement, saying the value of shares in its possession had fallen to the point where it wasn't sure it would have the required surplus funds required for payment.

NEC announced its results after trade Wednesday, when its shares rose 8.4 percent to 298 yen. But it has fallen 42 percent in the last two months. NEC Electronics, its chipmaker subsidiary, is down over 60 percent in that period.

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