The axe is set to fall over at NEC Corp in Japan with just about one in 10 of its workers to be cut. NEC has announced that is set to lay off 10,000 workers as it attempts to claw its way out of the red and back into the black. One reason cited for the job losses is stiff competition posed from rivals from foreign countries such as Apple. NEC blames the poor performance and the job cuts on soft demand for its mobile phones.
Another reason cited for the job cuts and the poor performance of the company is that foreign companies are pressing in on NEC's traditional turf in the IT infrastructure realm inside Japan. Along with the significant job cuts, NEC is also warning that it is set to post a massive net loss of 100 billion yen or about $1.3 billion. That loss would be posted for the year ending March 31. That massive loss certainly caught analysts by surprise with expectations being a profit of 15 billion yen.
Along with reports of job cuts and the giant loss, NEC is also slashing what it expected to ship in the mobile phone side of its business down to 5 million phones. That is a reduction of about 25% in mobile phone shipments reports Reuters. The job cuts will be finished by the end of September with about 7,000 of the jobs slashed to be in Japan and the remainder to be cut abroad. NEC's Nobuhiro Endo says that the cost of layoffs will result in a charge of ¥40 billion for the current financial year, but in the next financial year, the restructuring will result in an additional ¥40 billion in income for the company.