Presentation

Financial Results for 3Q of FY10/3
and Full Year Financial Forecast
January 28, 2010
NEC Corporation
(http://www.nec.co.jp/ir/en)
To be a leading global company
leveraging the power of innovation
to realize an information society
friendly to humans and the earth
NEC Group Vision 2017
© NEC Corporation 2010
CAUTIONARY STATEMENTS:
This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services, and business
performance of NEC Corporation and its consolidated subsidiaries (collectively “NEC”). Written forward-looking statements may appear in other
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You should not place undue reliance on forward-looking statements, which reflect NEC‘s analysis and expectations only. Forward-looking statements
are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ
materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements
include (i) global economic conditions and general economic conditions in NEC’s markets, (ii) fluctuating demand for, and competitive pricing pressure
on, NEC‘s products and services, (iii) NEC’s ability to continue to win acceptance of NEC‘s products and services in highly competitive markets, (iv)
NEC’s ability to expand into foreign markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC‘s business
and operations, (vi) NEC’s ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, (vii) movement of currency
exchange rates, particularly the rate between the yen and the U.S. dollar, (viii) the impact of unfavorable conditions or developments, including share
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that management will strive to achieve through the successful implementation of NEC’s business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. Securities may not be offered or sold in any
jurisdiction in which required registration is absent or an exemption from registration under the applicable securities laws is not granted.
Index
I. Financial Results for 3Q
II. Financial Forecast for FY10/3
III. Management Reform Progress
- Execution of equity finance to realize growth strategy
- Business restructuring
- Acceleration of “C&C Cloud Strategy”
Page 4
© NEC Corporation 2010
I. Financial Results for 3Q
3Q
Summary of Financial Results for 3Q
(Billions of Yen)
3Q(October to December)
FY09/3
FY10/3
Actual
Actual
YoY
9 Months total of FY10/3
FY09/3
FY10/3
Actual
Actual
Net Sales
948.3
825.4
- 13.0%
3,076.1
2,479.1
- 19.4%
Operating Income/Loss
-24.8
-7.5
17.2
-11.4
-45.2
-33.9
To Net Sales(%)
Ordinary Income/Loss
-
-49.8
To Net Sales(%)
Net Income/Loss
-
-6.4
-
-130.8
To Net Sales(%)
-
43.3
-42.8
-
-9.6
-
-
-56.3
-
121.2
-129.0
-
-13.5
-
-53.2
-
75.8
-
Net Income/Loss per
Share(Yen)
-64.62
-4.18
60.44
-63.77
-24.97
38.80
FCF
-138.2
-21.1
117.1
-197.8
-74.9
122.8
(Ref): Average exchange rate for 3Q of FY10/3 1$= ¥90.37, 1€= ¥133.31
Average exchange rate for 9 month total of FY10/3 1$= ¥94.50, 1€= ¥132.61
(Assumed exchange rate for 3Q of FY10/3 1$=¥90, 1€=¥130)
Page 6
YoY
© NEC Corporation 2010
3Q
Results by Segment for 3Q
Net Sales
Operating Income/Loss
16.0
1,052.2
948.3
IT Services
IT Products
Network
Systems
Social
Infrastructure
Personal
Solutions
206.5
53.2
192.2
65.1
IT Services
Network
Systems
825.4
Social
Infrastructure
189.9
232.0
219.6
71.0
Eliminations/
Unclassifiable
expenses
49.7
178.7
Page 7
-24.8
5.7
1.2
2.7
-0
-9.9
6.7
0.4
3.1
-4.8
221.0
224.8
64.7
157.5
1.6
2.1
IT Products
-7.5
3.6
1.2
3.2
2.5
-0.7 -0.3
-10.2
-24.7
-7.0
Electron
Devices
176.7
Others
8.5
0.1
7.8
67.5
204.2
Electron
Devices
（Billions of Yen）
-9.1
144.7
43.6
42.3
21.0
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
© NEC Corporation 2010
FY09/3
FY10/3
<Oct-Dec>
<Oct-Dec>
Personal
Solutions
Others
3Q
Sales Change （Year on Year）
FY09/3 3Q
< Oct. to Dec. >
948.3
（Billions of Yen）
IT Services -2.3(-1.2%)
IT Products -15.4(-23.6%)
Network Systems -40.9(-18.6%)
Social Infrastructure -2.8(-4.1%)
FY10/3 3Q
< Oct. to Dec. >
Personal Solutions
-27.4(-13.4%)
Electron Devices
-12.8(-8.1%)
Page 8
© NEC Corporation 2010
825.4
Others
-21.4
Operating Income/Loss Change
3Q
（Year on Year）
（Billions of Yen）
FY09/3 3Q
< Oct. to Dec. >
FY10/3 3Q
< Oct. to Dec. >
-24.8
-7.5
Others
-0.5
IT Services
+2.0
Eliminations/
Unclassifiable expenses
+2.0
IT Products -0.8
Network Systems
-7.3
Electron Devices
+14.5
Personal Solutions +8.1
Social Infrastructure -0.7
Page 9
© NEC Corporation 2010
3Q
Fixed Cost Reduction Progress in 3Q
▐ Reduced 241.3 billion yen year on year; principally in labor cost
(Progressed by 83%)
（Billions of Yen）
9 months total
Segment
reduction
(Progress)
IT Services, IT Products,
Network Systems, Social
Infrastructure
100.4
(84%)
Personal Solutions
27.8
(84%)
Electron Devices
NECEL
75.0
97.4
(82%)
Reducing
fixed costs
(Annual plan)
Reducing
fixed costs
(Annual plan)
Cost Item
119.0
Labor Cost
75.2
(96%)
78.0
Outsourcing
engineering,
consignment of
activities
105.1
(81%)
129.0
Depreciation,
lease, etc.
23.2
(70%)
33.0
IT expenses, sales
promotion and
advertisement, etc.
37.8
(76%)
50.0
Total
241.3
(83%)
290.0
33.0
NECEL
90.0
119.0
Others
15.7
(83%)
19.0
Total
241.3
(83%)
290.0
9 months total
reduction
(Progress)
* Forecast as of Jan. 28, 2010
Page 10
© NEC Corporation 2010
Net Income/Loss Change
3Q
（Year on Year）
（Billions of Yen）
FY09/3 3Q
< Oct. to Dec. >
FY10/3 3Q
< Oct. to Dec. >
-130.8
-9.6
Decrease loss from forex
Improve equity in net
income of affiliates
Improvement of
non-Operating Income/Loss
+26.1
Others
+77.9
Improvement of
Operating Income/Loss
+17.2
Loss from differed tax assets
in the previous year
Electron Devices
Personal Solutions
IT Services
Page 11
© NEC Corporation 2010
+14.5
+8.1
+2.0
II. Financial Forecast for FY10/3
Full
Year
Forecast
Forecast
Summary of Financial Forecast for Full Year
（Billions of Yen）
9 Months Total
Net Sales
Operating Income/Loss
FY09/3
FY10/3
Actual
Actual
3,076.1
2,479.1
-11.4
-45.2
to Sales(%)
Ordinary Income/Loss
to Sales(%)
Net Income/Loss
-
-129.0
to Sales(%)
FY10/3
Actual
Forecast
-19.4%
4,215.6
3,660.0
-13.2%
0
-33.9
-6.2
60.0
66.2
0
133.2
0
306.6
0
-
-56.3
-
-13.5
-93.2
-
-53.2
-
Difference
from Oct.
29 forecast
FY09/3
YoY
-
-42.8
Full Year
75.8
-296.6
-
1.6%
40.0
-
1.1%
10.0
-
YoY
0.3%
Net Income per Share(yen)
-63.77
-24.97
38.80
-146.64
4.46
151.10
-0.48
FCF
-197.8
-74.9
122.8
-145.8
0.0
145.8
0
(Ref)： Assumed exchange rate for 4Q of FY10/3 1$=¥90, 1€=¥130
* Forecast as of Jan. 28, 2010
Page 13
© NEC Corporation 2010
Financial Forecast Summary for the Full Year by Segment
Net Sales
Operating Income/Loss
4,215.6
960.5
941.8
IT Products
Network
Systems
Social
Infrastructure
Personal
Solutions
3,660.0
65.9
IT Products
8.1
266.5
Network
Systems
891.0
1,066.8
1,001.8
365.5
Social
Infrastructure
Personal
Solutions
215.0
850.0
Others
340.4
60.0
56.0
56.0
5.0
5.0
21.8
48.0
43.0
42.0
15.0
15.0
6.0
17.0
15.0
7.0
-51.0
-51.0
-34.0
-32.0
671.6
Forecast
as of Oct. 29
FY10/3
(Forecast)
69.0
14.4
17.6
8.4
14.7
8.2
5.8
-13.2
-41.3
309.0
930.8
860.0
60.0
-6.2
56.0
Eliminations/
Unclassifiable expenses
739.0
Others
IT Services
251.9
848.6
Electron
Devices
（Billions of Yen）
156.8
4,617.2
IT Services
Full Year
Forecast
-87.8
Electron
Devices
562.0
-38.8
181.7
144.8
94.0
FY08/3
FY09/3
FY10/3
(Forecast)
FY08/3
FY09/3
* Forecast as of Jan. 28, 2010
Page 14
© NEC Corporation 2010
Full
Year
Forecast
Forecast
Summary of Financial Forecast for Full Year by Segment
（Billions of Yen）
Sales
IT Services
Operating Income
OP Margin(%)
Sales
IT Products
Operating Income/Loss
OP Margin(%)
Sales
Network Systems
Operating Income
OP Margin(%)
Sales
Social Infrastructure
Operating Income
OP Margin(%)
Sales
Personal Solutions
Operating Income/Loss
9 Months Total
FY09/3
FY10/3
Actual
Actual
613.0
572.4
11.9
14.1
1.9%
191.4
13.2
6.9%
3.0%
0.3%
658.7
-6.4
OP Margin(%)
Sales
Electron Devices
Operating Loss
-
OP Margin(%)
Sales
Others
Operating Income
OP Margin(%)
Eliminations/Unclassifiable expense
Operating Loss
Sales
Total
Operating Income/Loss
OP Margin(%)
-
3.1%
-9.9%
1.6
340.4
8.2
848.6
-13.2
-27.2%
-27.6
671.6
-87.8
144.8
5.8
7.7
-19.4%
-33.9
-38.8
4,215.6
-6.2
-
-15.2%
1.0
0
-5.0
-9.2%
8.8
0
2.0
-12.9%
28.2
0
0
-16.3%
36.8
0
0
-35.1%
1.2
0
1.0
6.8
-13.2%
66.2
2.0
0
0
-
94.0
7.0
7.4%
-32.0
3,660.0
60.0
-
0
0
2.0%
562.0
-51.0
4.0%
-19.3%
-16.8
5.5%
-
-47.9%
2.1
0
0
5.1%
739.0
15.0
-
-5.4%
0.0
2.3%
309.0
17.0
2.4%
Difference
from 10/29
forecast
6.3%
850.0
43.0
4.2%
-18.2%
17.5
YoY
215.0
5.0
8.2%
9.4%
-22.7
2,479.1
-45.2
-
1,001.8
42.0
-
59.9
5.6
-30.4
3,076.1
-11.4
-21.4%
-13.2
2.1%
413.2
-52.8
115.0
3.5
266.5
21.8
1.2%
539.1
11.2
567.9
-25.2
-27.8%
-24.3
1.4%
194.4
2.3
FY09/3
Actual
941.8
56.0
5.9%
-
561.8
8.1
215.7
0.7
-6.6%
2.2
2.5%
138.3
-11.1
714.5
21.3
YoY
Full Year
FY10/3
Forecast
891.0
56.0
1.6%
* Forecast as of Jan. 28, 2010
Page 15
© NEC Corporation 2010
Full Year
Forecast
Business Trend Summary by Segment
(Operating income/loss change from previous forecast)
V Network Systems
U Social Infrastructure, Others,
Eliminations/Unclassifiable expenses
z Severe market conditions;
especially overseas
z Revised due to positive 3Q trends
(Upward revision by 5 billion yen)
(Downward revision by 5 billion yen)
+5.0
-5.0
＜Strengthen 4Q activities＞
9 Efficiency of R&D expenses, and
reduce hardware development
costs
Z IT Services, Personal Solutions
are almost in line with forecast
±０
9 Thorough cost reduction in all
activities
Unchanged full year forecast while trends vary per segment
* Forecast as of Jan. 28, 2010
Page 16
© NEC Corporation 2010
Full Year
Forecast
Sales Change (Year on Year)
(Billions of Yen)
FY09/3
4,215.6
IT Services -50.8 (-5.4%)
IT Products -51.5 (-19.3%)
Network Systems -151.8 (-15.2%)
Social Infrastructure -31.4 (-9.2%)
Personal Solutions
-109.6 (-12.9%)
Electron Devices
-109.6 (-16.3%)
FY10/3
(Forecast)
3,660.0
Others
-50.8
* Forecast as of Jan. 28, 2010
Page 17
© NEC Corporation 2010
Operating Income/Loss Change (Year on Year)
Full Year
Forecast
(Billions of Yen)
Difference from
October 29 forecast
+2.0
Eliminations/
Unclassifiable expenses
+6.8
IT Services ±0.0
60.0
Others +1.2
+1.0
IT Products
-16.8
FY10/3
(Forecast)
Electron Devices
+36.8
Personal Solutions
+28.2
FY09/3
-6.2
+2.0
-5.0
Social Infrastructure +8.8
Network Systems +1.0
Page 18
* Forecast as of Jan. 28, 2010
© NEC Corporation 2010
Full Year
Forecast
Net Income/Loss Change (Year on Year)
(Billions of Yen)
FY09/3
-296.6
FY10/3
(Forecast)
Decrease of Loss from valuation of
investment expenses and
business structure improvement expenses
10.0
Improve equity in net income of
affiliates, forex etc.
Losses related to litigation
in the previous year
Others
+173.4
Improvement of
non-operating income/loss
+67.0
Electron Devices
Personal Solutions
+36.8
+28.2
Improvement of
operating income/loss
+66.2
Page 19
© NEC Corporation 2010
* Forecast as of Jan. 28, 2010
III. Management Reform Progress
Execution of Equity Finance to Realize Growth Strategy
Announcement
▐ Funded 118.5 billion Yen* through execution of equity finance
z Issued new shares:
575 million shares
- Primary shares （537.5 million shares）
（Diluted 28.3%）
・・・ Payment closed 11/26
- Issuance of new shares by third-party allotment （37.5 million shares）
・・・
Payment closed 12/24
z Offering price:
z Amount to be paid:
215 Yen per share
206.12 Yen per share
z Use of proceeds: Investment for growth of the “C&C Cloud”
Investment in the development of cloud service platforms <40 billion Yen>
Investment in the development of Next Generation Networks (NGNs) <20 billion Yen>
Capital expenditures in the green technology area <20 billion Yen>
（Remainder: Repayment of a portion of debt）
Offering strengthens financial foundations and
helps realize future growth strategy
～ Improve equity capital ratio to 24.4% and D/E ratio to 1.16 times ～
* Amount of funds raised = Number of newly issued shares × Amount to be paid
Page 21
© NEC Corporation 2010
3Q
<Ref.> Financial Position Data
（Billions of Yen）
09/12
3,075.4
2,938.3
-137.0
3,396.1
Net Assets
785.6
844.1
58.5
982.4
Interest-bearing debt
925.2
833.2
-91.9
1,058.9
Shareholder's Equity
641.7
718.0
76.4
816.5
Equity ratio （％）
20.9%
24.4%
3.5pt
24.0%
D/E ratio
1.44
1.16
0.28pt
1.30
Net D/E ratio
0.95
0.79
0.16pt
0.81
Total Assets
Page 22
Difference
from 09/3
09/3
© NEC Corporation 2010
08/12
Announcement
Business Restructuring
▐ NEC Electronics and Renesas reached a definitive
agreement on business integration
z Signed a definitive agreement of business integration
which takes effect from April 1, 2010 (planned)
（Announced December 15, 2009）
▐ Establish NEC CASIO Mobile Communications
z Established NEC CASIO Mobile Communications on
December 22, 2009 in preparation for the integration
of the business functions of NEC's mobile terminal
operations unit and Casio Hitachi Mobile Communications
（Announced December 21, 2009）
Steady progress for the new business structure
in the next fiscal year
Page 23
© NEC Corporation 2010
Acceleration of the “C&C Cloud Strategy”
▐ Practice “Cloud system implementation” through revamping NEC’s own
core system
z New management system (global standard system) started operation from
January, 2010 which realizes cloud service in accounting areas
Purchasing
Sales
Accounting
Global data center
Integrated monitoring system
・・・・
Common AP Platform
Common Platform
Provide on-demand service (utility billing)
to group companies worldwide
HQ
Group companies in Japan
140,000 global headcount
Overseas offices/companies
Provide “C&C Cloud” solutions to customers
based on our own practices
Page 24
© NEC Corporation 2010
Summary
▐ Actual 3Q results follow almost in line with our original plan
▐ Aim to meet the earnings forecast for FY10/3
z 60 billion yen operating profit, 10 billion yen net profit, and resumption of
dividend
• Cover Network Systems decline through other segments
▐ Completion of management reforms
z Earnings structure reform - Conversion toward leaner earnings structure • Fixed cost reduction of 290 billion yen
z Business structure reform - Business portfolio revision • Deconsolidation of semiconductor business and strengthening mobile handset
business
▐ Acceleration of “C&C Cloud Strategy” toward mid-term growth
Make every effort of NEC group to sales expansion and
thorough cost reduction
* Forecast as of Jan. 28, 2010
Page 25
© NEC Corporation 2010
Financial results for the 3Q of the fiscal
year ending March 31, 2010
（appendix）
3Q
Results by Segment for 3Q
(Billions of Yen)
Net Sales
IT Services
Operating Income
To Net Sales(%)
Net Sales
IT Products
Operating Income/Loss
To Net Sales(%)
Net Sales
Network Systems
Operating Income/Loss
To Net Sales(%)
Net Sales
Social Infrastructure
Operating Income/Loss
To Net Sales(%)
Net Sales
Personal Solutions
Operating Income/Loss
3Q(October to December)
FY09/3
FY10/3
YoY
Actual
Actual
192.2
189.9
- 1.2%
1.6
3.6
2.0
0.8%
65.1
2.1
Electron Devices
Operating Income/Loss
219.6
6.7
Others
Operating Income/Loss
To Net Sales(%)
Elimination/Unclassifiable expenses
Operating Loss
Net Sales
Total
Operating Income/Loss
To Net Sales(%)
Page 28
2.5%
3.0%
0.6%
-
157.5
-24.7
-
-9.1
948.3
-24.8
215.7
0.7
- 13.4%
8.1
658.7
-6.4
- 8.1%
14.5
567.9
-25.2
- 50.5%
-0.5
115.0
3.5
© NEC Corporation 2010
-
- 21.4%
-13.2
1.4%
194.4
2.3
- 9.9%
1.6
1.2%
539.1
11.2
-
- 18.2%
17.5
2.1%
413.2
-52.8
-
- 27.2%
-27.6
-
59.9
5.6
3.1%
-30.4
3,076.1
-11.4
- 47.9%
2.1
9.4%
-22.7
2,479.1
-45.2
-
- 6.6%
2.2
- 27.8%
-24.3
561.8
8.1
0.3%
2.0
- 13.0%
17.2
-
138.3
-11.1
3.0%
12.0%
-7.0
825.4
-7.5
-
- 4.1%
-0.7
-
21.0
2.5
7.2%
714.5
21.3
1.8%
144.7
-10.2
42.3
3.1
- 18.6%
-7.3
-
176.7
3.2
191.4
13.2
YoY
2.5%
6.9%
-
64.7
-0.3
204.2
-4.8
1.9%
- 23.6%
-0.8
178.7
-0.7
67.5
0.4
To Net Sales(%)
Net Sales
49.7
1.2
3.2%
To Net Sales(%)
Net Sales
1.9%
9 Months total
FY09/3
FY10/3
Actual
Actual
613.0
572.4
11.9
14.1
7.7
- 19.4%
-33.9
-
3Q
IT Services Business
3Q
9 Months total
Sales
(Billions of Yen)
YoY
613.0
613.2
206.5
572.4
192.2
189.9
-0.0%
-6.6%
-7.0%
-1.2%
Operating
Income
21.2
Operating
Income
11.9
14.1
8.5
1.6
Page 29
3.6
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
IT Services Business
(Billions of Yen)
▐ Sales
189.9 (-1.2%)
Z SI services:
Secured same level of sales as previous year through stable sales in the
Government, Retail/Service sector
V Outsourcing/Support services:
Decline in sales of support services due to severe market conditions
▐ Operating Income
3.6
(+2.0)
U Improved from previous year by thorough fixed cost reduction
Page 30
© NEC Corporation 2010
3Q
IT Products Business
3Q
9 Months total
(Billions of Yen)
YoY
65.1
Sales
53.2
191.4
Sales
+22.3%
163.7
49.7
+16.9%
138.3
-23.6%
-27.8%
2.1
1.2
Operating
Income
0.1
Page 31
Operating
Income/Loss
-4.1
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
13.2
-11.1
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
IT Products Business
(Billions of Yen)
▐ Sales
49.7 (-23.6%)
V Software:
Decreased from continuous general restraining of IT investment by
customer
V Servers:
Decreased largely due to loss of large project from the same period of
the previous year
Sales of thin-client and IA servers increased
V Others:
Decreased from continuous suspension of demand from financial
industries for professional workstation
▐ Operating Income
1.2
(-0.8)
V Return to the black, decline due to the decrease of large project
Page 32
© NEC Corporation 2010
3Q
Network Systems Business
3Q
9 Months total
Sales
（Billions of Yen）
Sales
YoY
740.2
232.0
714.5
219.6
561.8
-3.5%
178.7
-5.3%
Operating
Income
-18.6%
32.6
Operating
Income/Loss
7.8
-21.4%
21.3
6.7
8.1
-0.7
Page 33
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
Network Systems Business
▐ Sales
178.7 (-18.6%)
(Billions of Yen)
V Business for Telecom Carriers:
In overseas market, CAPEX cutbacks by carriers and continuous
impact of the appreciating yen
Decrease in submarine cable system sales due to small projects taking
place this year, but steadily accepting orders
V Business for Enterprises:
Decrease both in Japan and overseas markets due to continuous CAPEX
cutbacks related to the global financial crisis
▐ Operating Loss
-0.7 (-7.3)
V Decrease because of sales decreases, despite fixed cost reductions
Page 34
© NEC Corporation 2010
3Q
Social Infrastructure Business
3Q
Sales
Sales
9 Months total
(Billions of Yen)
YoY
220.9
71.0
67.5
215.7
194.4
64.7
-2.4%
-9.9%
-5.0%
-4.1%
Operating
Income
4.7
Operating
Income/loss
5.7
2.3
0.4
Page 35
-0.3
0.7
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
Social Infrastructure Business
(Billions of Yen)
▐ Sales
64.7
(-4.1%)
V Broadcast and Control systems ／ Aerospace and Defense ：
Sales decreased due to loss of large projects and investment restraint
related to the declining economy
▐ Operating Loss -0.3 (-0.7)
V Decrease because of sales decline, despite reductions of fixed cost and
SG&A
Page 36
© NEC Corporation 2010
3Q
Personal Solutions Business
3Q
9 Months Total
Sales
Sales
221.0
658.7
-18.2%
-13.4%
204.2
Mobile
176.7
Mobile
Terminals
YoY
-0.8%
663.9
-7.6%
539.1
238.4
273.0
Terminals
88.0
(Billions of Yen)
-20.7%
216.4
91.8
59.3
-35.4%
PC and
Others
133.0
Page 37
＋4.4%
Others
425.5
-16.3%
385.7
322.7
117.4
112.4
1.2
Operating
Income/Loss
PC and
Operating
Income/Loss
-4.8
3.2
4.3
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
11.2
-6.4
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
Personal Solutions Business
(Billions of Yen)
▐ Sales
176.7 （-13.4%）
V Mobile Terminals :
Sales decreased due to a difference in shipment schedules for new
products (FY09/3 Nov.→ FY10/3 Dec.) and a declining number of models
U PC and Others:
Sales increased due to growth in the number of units and an improving
product mix
▐ Operating Income
3.2
（+8.1）
U Mobile Terminals and PC and Others both turn to profit due to reduced
fixed costs/overall costs and improved development efficiency
Page 38
© NEC Corporation 2010
3Q
＜ Mobile Handset / PC Shipments ＞
（M = Millions of Units)
Mobile Handsets
2
1.5
1.6
1.2
0.9
1
0.5
1.6
1.2
1.1
1.3
1.3
1.0
5.1M units
4.8M units
0.9
0.7
4.0M units (forecast)
0
1Q/08.3
２Ｑ
３Ｑ
４Ｑ
1Q/09.3
２Ｑ
３Ｑ
４Ｑ
1Q/10.3
720
800
600
550
810
620 645 620 615
590
３Ｑ
４Ｑ
（K = Thousands of units)
PCs (for the Japanese market)
1000
２Ｑ
580
500
690
400
2,500K units
2,670K units
200
2,500K units (forecast)
0
1Q/08.3
２Ｑ
３Ｑ
４Ｑ
1Q/09.3
２Ｑ
３Ｑ
４Ｑ
1Q/10.3
２Ｑ
３Ｑ
４Ｑ
* Forecast as of January 28, 2010
Page 39
© NEC Corporation 2010
3Q
Electron Devices Business
3Q
9 Months total
(Billions of Yen)
Sales
Sales
YoY
655.5
-13.4%
224.8
567.9
-27.2%
-29.9%
-8.1%
413.2
157.5
144.7
Operating 128.5
Income/Loss
2.7
Semiconductors
339.2
117.9
-24.7
29.0
464.8
Operating
Income/Loss
-10.2
5.6
26.8
103.1
-25.2
74.0
-52.8
Electric component/ others
Page 40
FY08/3
FY09/3
FY10/3
FY08/3
<Oct-Dec>
<Oct-Dec>
<Oct-Dec>
<Apr-Dec>
© NEC Corporation 2010
FY09/3
FY10/3
<Apr-Dec>
<Apr-Dec>
3Q
Electron Devices Business
(Billions of Yen)
▐ Sales
144.7 (-8.1%)
V Semiconductors:
Drop in LSI sales for household electronic appliances
Increase in microcomputer sales for cars and general-purposes
V Electric Components/Others:
Drop in the sales of general components like capacitors and industrial
LCD
▐ Operating Loss -10.2 (+14.5)
U Semiconductors:
Improvement due to fixed cost reduction
U Electric Components/Others:
Improvement due to fixed cost reduction
Page 41
© NEC Corporation 2010
3Q
< Financial Results for NEC Electronics >
(Billions of Yen)
Sales
168.7
167.5
128.5
119.1
117.9
102.3
85.9
Operating
Income/Loss
3.0
１Ｑ
-0.3
２Ｑ
-16.0
３Ｑ
-53.0
４Ｑ
FY09/3
-21.5
１Ｑ
-15.4
２Ｑ
-9.3
３Ｑ
FY10/3
* The results for the area of Semiconductors are the official public figures of NEC Electronics Corporation, which are prepared in accordance with Japanese GAAP.
Page 42
© NEC Corporation 2010
3Q
<Ref.> Capital Expenditures and Others
FY08/3
FY09/3
Actual
Actual
（Billions of Yen）
Difference
YoY
from Oct.
29
FY10/3
YoY
Forecast
Capial Expenditure
122.6
103.1
- 15.9%
96.0
- 6.9%
-
Depreciations
147.8
133.6
- 9.6%
108.0
- 19.2%
-
R&D expenses
352.2
346.5
- 1.6%
280.0
- 19.2%
-
（Billions of Yen）
FY09/3
3Q Actual
R&D expenses
83.0
FY10/3
3Q Actual
YoY
-
64.4
YoY
-22.4%
* Forecast as of Jan. 28, 2010
Page 43
© NEC Corporation 2010
<Ref.> Geographical Segments Information
（Billions of Yen）
3Q (October to December)
FY09/3
FY10/3
YoY
Actual
Actual
789.5
684.2
-13.3%
-13.8
-4.8
9.0
Total sales
Japan
Operating income/loss
-
％ Operating income
50.2
0.7
Total sales
ASIA
Operating income
％ Operating income
48.2
-0.7
Total sales
Europe
1.5%
Operating income/loss
60.5
-4.3
Total sales
Others
Operating income/loss
％ Operating income
Eliminations/Others
Operating income/loss
Consolidated
Total
Operating income/loss
948.3
-24.8
Total sales
％ Operating income
51.1
4.7
1.8%
4.0
9.3%
-
China, Chinese Taipei, India,
Singapore and Indonesia
-15.5%
1.2
U.K., France, the Netherlands,
Germany, Italy and Spain
-18.4%
4.2
U.S.A
1.3%
49.4
-0.1
-6.7
Major countries and regions
-
40.7
0.5
-
％ Operating income
3Q
-7.9
-1.2
825.4
-7.5
- 13.0%
17.2
-
* Geographical distances are considered in classification of country or region
* Total sales represents sales to outside customers
Page 44
© NEC Corporation 2010
3Q
<Ref.> Overseas sales
（Billions　of Yen）
3Q (October to December)
Major countries and regions
FY09/3
FY10/3
YoY
Actual
Actual
Asia
Europe
Others
Total
Net sales
To consolidated total （％）
Net sales
To consolidated total （％）
Net sales
To consolidated total （％）
Net sales
To consolidated total （％）
89.6
80.0
9.4%
9.7%
59.3
41.3
6.3%
5.0%
74.0
53.9
7.8%
6.5%
222.9
175.2
23.5%
21.2%
-10.7% China, Chinese Taipei, India,
Singapore and Indonesia
-30.3% U.K., France, the Netherlands,
Germany, Italy and Spain
-27.2% U.S.A
-21.4%
* Geographical distances are considered in classification of country or region
* Overseas sales represent sales of the Company and its consolidated subsidiaries to countries and regions outside of Japan
Page 45
© NEC Corporation 2010
Full year forecast for FY10/3 (appendix)
Full
Year
Forecast
Forecast
Summary of Financial Forecast for Full Year by Segment
（Billions of Yen）
Sales
IT Services
Operating Income
OP Margin(%)
Sales
IT Products
Operating Income/Loss
OP Margin(%)
Sales
Network Systems
Operating Income
OP Margin(%)
Sales
Social Infrastructure
Operating Income
OP Margin(%)
Sales
Personal Solutions
Operating Income/Loss
9 Months Total
FY09/3
FY10/3
Actual
Actual
613.0
572.4
11.9
14.1
1.9%
191.4
13.2
6.9%
3.0%
0.3%
658.7
-6.4
OP Margin(%)
Sales
Electron Devices
Operating Loss
-
OP Margin(%)
Sales
Others
Operating Income
OP Margin(%)
Eliminations/Unclassifiable expense
Operating Loss
Sales
Total
Operating Income/Loss
OP Margin(%)
-
3.1%
-9.9%
1.6
340.4
8.2
848.6
-13.2
-27.2%
-27.6
671.6
-87.8
144.8
5.8
7.7
-19.4%
-33.9
-38.8
4,215.6
-6.2
-
-15.2%
1.0
0
-5.0
-9.2%
8.8
0
2.0
-12.9%
28.2
0
0
-16.3%
36.8
0
0
-35.1%
1.2
0
1.0
6.8
-13.2%
66.2
2.0
0
0
-
94.0
7.0
7.4%
-32.0
3,660.0
60.0
-
0
0
2.0%
562.0
-51.0
4.0%
-19.3%
-16.8
5.5%
-
-47.9%
2.1
0
0
5.1%
739.0
15.0
-
-5.4%
0.0
2.3%
309.0
17.0
2.4%
Difference
from 10/29
forecast
6.3%
850.0
43.0
4.2%
-18.2%
17.5
YoY
215.0
5.0
8.2%
9.4%
-22.7
2,479.1
-45.2
-
1,001.8
42.0
-
59.9
5.6
-30.4
3,076.1
-11.4
-21.4%
-13.2
2.1%
413.2
-52.8
115.0
3.5
266.5
21.8
1.2%
539.1
11.2
567.9
-25.2
-27.8%
-24.3
1.4%
194.4
2.3
FY09/3
Actual
941.8
56.0
5.9%
-
561.8
8.1
215.7
0.7
-6.6%
2.2
2.5%
138.3
-11.1
714.5
21.3
YoY
Full Year
FY10/3
Forecast
891.0
56.0
1.6%
* Forecast as of Jan. 28, 2010
Page 47
© NEC Corporation 2010
Full Year
Forecast
IT Services Business
（Billions of Yen）
Sales
YoY
960.5
941.8
891.0
▐ Sales 891.0 (-5.4%)
V SI Service:
Decline from IT investment
restraint
Sales to Retail sector is stable
-1.9%
V Outsourcing/Support service:
Decline in sales due to severe
market conditions
-5.4%
Operating
Income
65.9
FY08/3
Aim to maintain stable outsourcing
business sales
56.0
FY09/3
56.0
FY10/3
(Forecast)
▐ Operating Income 56.0 (±0)
Z Despite a sales decrease, the same
level of profit as the previous year will
be maintained by fixed cost reductions,
project management and the use of
overseas resources
* Forecast as of Jan. 28, 2010
Page 48
© NEC Corporation 2010
IT Services Business Trends by Sector
Full Year
Forecast
▐ Continuing trend of severe IT investment restraint
▐ Ensure profitability reform through implementing SI innovation and cost reduction
Sector
Business situation
Government
Focuses on secure its orders of this year’s initial/extra budget while in cutbacks trend of IT related
budget. Competition is inclined to tighten by the increase of newcomer.
Public/Medical
New IT investment tends to be revised/postponed due to lower tax revenues. Steady progress of
reconstructing core systems which have clear ROI benefit. Focusing on core system reconstruction
proposals, and accommodation of administrative and financial reform by offering our core solution
“GPRIME” for local governments.
Finance
More time needed for a full recovery, though finance sector indexes are continuously improving and
IT investment has bottomed out. Promote service businesses such as system integration that
contribute to cost reductions.
Telecom/Media
Continuing trend of IT investment restraint in both the Telecom and Media sector. Some projects
postponed. Strengthen new business including cloud service for global carriers and digital signage.
Manufacturing
There is some investment in emerging economies, though IT investment restraint is still continuing.
Strengthen “Cloud-oriented service platform solution” proposals as reflected in the reform of NEC’s
IT system and ERP “EXPLANNER” for the SMB market.
Retail/Service
Stable demand for reconstruction of core systems that support the launch of new business, and an
expanding internet market. Strengthen new service proposals, such as SaaS EC systems similar to
”NeoSarf/EC” for large scale organizations etc.
* Forecast as of Jan. 28, 2010
Page 49
© NEC Corporation 2010
Full Year
Forecast
IT Products Business
（Billions of Yen）
Sales
YoY
▐ Sales
215.0 (-19.3%)
V Software:
Decline due to IT investment restraint
266.5
V Servers:
Decrease due to loss of large project
from the previous year.
Stable demand of thin-client systems
in the Government and Public
sectors
V Others:
251.9
215.0
+5.8%
21.8
-19.3%
Drop in sales, due to lower demand
for professional workstations from
the financial industry
Operating
Income
8.1
5.0
FY08/3
FY09/3
FY10/3
(Forecast)
▐ Operating Income
5.0
(-16.8)
V Loss due to sales decrease and loss of
large project from the previous year
Aim to improve by further cost
reduction
* Forecast as of Jan. 28, 2010
Page 50
© NEC Corporation 2010
Full Year
Forecast
Network Systems Business
（Billions of Yen）
Sales
YoY
1,066.8
1,001.8
Operating
Income
850.0
-6.1%
69.0
-15.2%
42.0
43.0
▐ Sales
850.0 (-15.2%)
V Business for Telecom Carriers:
Reduced investment by Japanese
mobile carriers
Overseas market; CAPEX cutbacks
by carriers and continued
impact of the appreciating yen
V Business for Enterprises:
Decrease both in Japan and
overseas markets due to continued
CAPEX cutbacks related to the
global financial crisis
▐ Operating Income 43.0 (+1.0)
FY08/3
FY09/3
FY10/3
U Aim same income level as previous
year through fixed cost reductions,
despite decreasing sales
(Forecast)
* Forecast as of January 28, 2010
Page 51
© NEC Corporation 2010
Full Year
Forecast
Network Systems Business Trends
▐ Expect sales decrease due to cutbacks in CAPEX
by carriers and enterprises both in Japan and overseas
▐ Aim same income level as previous year by reducing fixed cost
Business situation
Business for
Telecom Carriers
Fixed line
(in Japan)
Steady
Try to spur carrier investment
Wireless
(in Japan)
Expect sales decrease due to reduced investment by mobile carriers
Try to spur carrier investment
Fixed line
(overseas)
Expect sales decrease due to cutbacks in CAPEX
Try to secure submarine cable system orders
Continuous impact of the
appreciating yen
Wireless
(overseas)
Business for
Enterprises
Expect sales decrease due to cutbacks in CAPEX etc.
Try to secure loyal customer bases in overseas market with new business
such as LTE, WiMAX, Femto cell etc.
Expect sales decrease due to cutbacks in CAPEX both in Japan and overseas.
Try to expand sales by strengthening the approach to customers
* Forecast as of January 28, 2010
Page 52
© NEC Corporation 2010
Full Year
Forecast
Social Infrastructure Business
（Billions of Yen）
Sales
YoY
365.5
▐ Sales
Decrease due to loss of large project
and investment restraint related to
the economic downturn
309.0
-6.9%
-9.2%
(-9.2%)
V Broadcast and Control systems /
Aerospace and Defense ：
340.4
Operating
Income
309.0
17.0
Steady performance for revised
budget items and control terminals
14.4
▐ Operating Income 17.0
8.2
FY08/3
FY09/3
(+8.8)
U Improvement by reducing costs and
SG&A
FY10/3
(Forecast)
* Forecast as of January 28, 2010
Page 53
© NEC Corporation 2010
Full Year
Forecast
Personal Solutions Business
（Billions of yen)
▐ Sales 739.0 (-12.9%)
Sales
YoY
-8.8%
930.8
-12.9%
848.6
Mobile
V Mobile Terminals :
Decrease due to shipment
declines caused by the shrinking
handset market in Japan
V PC and Others:
Decrease due to the CAPEX
cutbacks from enterprises and
the drop of unit prices
739.0
340.3
Terminals
348.1
-15.3%
295.0
PC and
Others
590.5
Operating
Income/Loss
▐ Operating Income
-11.3%
500.5
444.0
17.6
15.0
-13.2
FY08/3
FY09/3
15.0 (+28.2)
U Expect turnaround by reducing
fixed costs, even as shipments
decline and the product mix
changes
FY10/3
(Forecast)
* Forecast as of January 28, 2010
Page 54
© NEC Corporation 2010
Full Year
Forecast
Personal Solutions Business
▐ Mobile Terminals
z The 2H domestic market will be at the same level as 1H
z Downward revision for this year’s shipment volumes
(from 4.5M to 4M)
However, aim to secure profitability by improving
development efficiency, reducing fixed costs etc.
With water proof and
long-life paint
▐ PCs
z Recovery trend in 3Q domestic market,
positive growth expected in 2H
z Aim to maintain original shipment targets
from demand created in the consumer market
for Windows 7 and the “School New Deal” policy
Ｌａｖｉｅ Ｌ
Applicable to 64bit OS
* Forecast as of January 28, 2010
Page 55
© NEC Corporation 2010
Full Year
Forecast
Electron Devices Business
（Billions of Yen）
▐ Sales
Sales
YoY
562.0
(-16.3%)
V Semiconductors:
860.0
Drop in all product sales such as
SoC, MCU and discrete products
-21.9%
671.6
V Electric Components/Others:
-16.3%
562.0
Operating 550.7
Income/Loss
Expect sales decrease due to
continued customer CAPEX
reductions. Yet, signs of growing
demand exist in some areas
462.0
8.4
-51.0
-87.8
120.9
▐ Operating Loss
-51.0
(+36.8)
U Semiconductors:
100.0
Expect to improve through fixed cost
reductions in severe market conditions
U Electric Components/Others
FY08/3
FY09/3
FY10/3
(Forecast)
Expect to improve through steady
implementation of structure reform
* Forecast as of Jan. 28, 2010
Page 56
© NEC Corporation 2010