Financial Results for 1Q for the Fiscal Year Ending March 31, 2010 July 30, 2009 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 Page 2 © NEC Corporation 2009 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 documents that NEC files with stock exchanges or regulatory authorities, such as the Director of the Kanto Finance Bureau, and in reports to shareholders and other communications. NEC is relying on certain safe-harbors for forward-looking statements in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “targets,” “aims,” or “anticipates,” or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them. 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 price declines, in the equity markets which may result in losses from devaluation of listed securities held by NEC, and (ix) impact of any regulatory action or legal proceeding against NEC. Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise. The management targets included in this material are not projections, and do not represent management‘s current estimates of future performance. Rather, they represent targets 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. Page 3 © NEC Corporation 2009 Index I. Financial Results for 1Q II. Summary of the Financial Forecast for FY10/3 < Reference > Financial Forecast (Appendix) Topics and Achievements Page 4 © NEC Corporation 2009 I. Financial Results for 1Q 1Q Summary of Financial Results for 1Q (Billions of Yen) ▐ Net Sales 1st Quarter Net Sales Operating Income/Loss To net sales(%) Ordinary Income/Loss To net sales(%) Net Income/Loss To net sales(%) FY09/3 FY10/3 Actual Actual YoY 1,001.2 778.5 -22.3% 4.1 -40.0 -44.2 0.4% 7.1 - -45.0 0.7% 0.5 -52.1 - -33.8 0.0% -34.3 - Net Income/Loss per Share(Yen) 0.21 -16.74 -16.95 FCF -2.0 -47.5 -45.4 Declined in all segments due to weakened demand from the downturn of the economy ▐ Operating Loss Gross operating profit declined despite the reduction of SG&A ▐ Ordinary Loss Greater operating loss, investment loss on equity method, decline of foreign exchange profit ▐ Net Loss Increased loss due to increase of ordinary loss Better than original forecast (Ref): Average exchange rate for 1Q of FY10/3 (Assumed exchange rate for FY10/3 Page 6 1$= ¥97.79, 1€= ¥129.96 1$=¥90, 1€=¥120) © NEC Corporation 2009 Summary of Financial Results for 1Q by Segment (Billions of Yen) Sales IT Services Operating Loss 1st Quarter FY09/3 FY10/3 Actual Actual 183.6 169.7 -3.1 -0.1 OP Margin(%) Sales IT Products Operating Income/Loss OP Margin(%) Sales Network Systems Operating Income/Loss OP Margin(%) Sales Social Infrastructure Operating Loss - 62.6 12.5 20.0% Sales Personal Solutions Operating Income OP Margin(%) Sales Electron Devices Operating Loss Others Operating Income 235.3 5.9 Operating Loss Sales Total Operating Income/Loss OP Margin(%) Page 7 © NEC Corporation 2009 - -4.3% 2.0 - 195.0 8.7 2.5% 203.7 -1.7 -17.1% 2.8 4.5% 122.2 -27.6 - 37.5 0.0 OP Margin(%) Eliminations/Unclassifiable expenses -20.0% -4.0 57.2 -0.4 - OP Margin(%) Sales - 0.2% OP Margin(%) -37.5% -23.5 175.0 -3.5 59.8 -2.4 -40.0% -26.0 - 20.2 0.3 - -7.6 1,001.2 4.1 0.4% -7.6% 3.0 - 39.1 -11.0 218.7 0.5 YoY -46.1% 0.4 1.7% -6.5 778.5 -40.0 1.1 -22.3% -44.2 - 1Q 1Q Results by Segment for 1Q Net Sales 1,007.8 1,001.2 176.1 183.6 IT Services IT Products Network Systems 49.3 234.8 62.6 Operating Income/Loss Network Systems 60.5 778.5 Social Infrastructure 169.7 Others 218.7 59.8 4.1 0.5 IT Products 14.4 39.1 Social Infrastructure （Billions of Yen） 11.3 Electron Devices 175.0 1.3 7.2 1.2 -3.2 -1.5 -8.6 Personal Solutions 12.5 -40 0.5 5.9 0 -3.1 -2.4 -1.7 -7.6 8.7 -0.1 0.3 -11.0 -3.5 -0.4 IT Services Personal Solutions 223.8 235.3 57.2 -27.6 195.0 Electron Devices 208.9 203.7 Eliminations/ Unclassifiable expenses 122.2 Others 54.4 FY08/3 1Q Page 8 37.5 FY09/3 1Q -6.5 20.2 FY10/3 1Q © NEC Corporation 2009 FY08/3 1Q FY09/3 1Q FY10/3 1Q 1Q Sales Change (Year on Year) （Billions of Yen） FY09/3 1Q 1,001.2 IT Services -13.9 (-7.6%) IT Products -23.5 (-37.5%) Network Systems -43.6 (-20.0%) Personal Solutions -40.3 (-17.1%) Social Infrastructure -2.6 (-4.3%) FY10/3 1Q Electron Devices -81.5 (-40.0%) 778.5 Others -17.3 Page 9 © NEC Corporation 2009 Operating Income/Loss Change (Year on Year) FY09/3 1Q 1Q （Billions of Yen） IT Services +3.0 FY10/3 1Q 4.1 -40.0 IT Products -23.5 Personal Solutions +2.8 Network Systems -4.0 Social Infrastructure +2.0 Electron Devices -26.0 Others +0.4 Page 10 © NEC Corporation 2009 Eliminations/ Unclassifiable expenses +1.1 1Q Fixed Cost Reduction Progress for 1Q ▐ Reduced 73.5 billion yen year on year principally in labor cost (Progressed by 27%) （Billions of Yen） Segment 1Q Reduction (Progress) IT Services, IT Products, Network Systems, Social Infrastructure 30.3 (29%) Personal Solutions 6.1 (20%) Electron Devices Others Total NECEL ２５.０ 32.2 (27%) Reducing fixed costs (Annual plan) １０５.０ ３０.０ NECEL ９０.０ １１８.０ 4.9 (29%) １７.０ 73.5 (27%) ２７０.０ Reducing fixed costs (Annual plan) Cost Item 1Q Reduction (Progress) Labor Cost 25.2 (35%) ７２.０ Outsourcing engineering, consignment of activities 26.1 (21%) １２４.０ Depreciation, lease, etc 7.4 (26%) ２８.０ IT expenses, sales promotion and advertisement, etc 14.8 (32%) ４６.０ Total 73.5 (27%) ２７０.０ * Forecast as of July 30, 2009 Page 11 © NEC Corporation 2009 1Q Net Income/Loss Change (Year on Year) （Billions of Yen） FY09/3 1Q FY10/3 1Q 0.5 -33.8 Electron Devices -26.0 IT Products -23.5 Deterioration of operating loss -44.2 Exchange gains and losses -4.5 Net equity investment -3.0 Taxes and Minority interests +19.5 Deterioration of non-operating loss -7.9 Deterioration of special loss -1.7 Page 12 © NEC Corporation 2009 Results by Segment 1Q IT Services Business （Billions of Yen） Sales YoY 183.6 176.1 +4.3% ▐ Sales 169.7 (-7.6%) V SI services: Declined through IT investment restraint Sales to Government, Public and Retail sectors were stable 169.7 -7.6% V Outsourcing/Support services: Relatively stable in outsourcing services Operating Income/Loss 0.5 -3.1 -0.1 ▐ Operating Loss -0.1 (+3.0) U Improved by SI innovation activities and fixed cost reduction FY08/3 1Q Page 14 FY09/3 1Q FY10/3 1Q © NEC Corporation 2009 1Q IT Products Business ▐ Sales （Billions of Yen） Sales V Software: Drop in sales, especially mainframe related products YoY 62.6 49.3 +26.8% Stable sale of security products V Servers: -37.5% Decreased significantly due to declining mainframe sales 39.1 Operating Income/Loss 39.1 (-37.5%) V Others: 12.5 -3.2 Drop in sale of peripherals Steady sales of professional workstations -11.0 ▐ Operating Loss -11.0 (-23.5) FY08/3 1Q Page 15 FY09/3 1Q FY10/3 1Q V Decreased significantly, mainly due to loss of large mainframe project from the previous year Almost in line with original forecast © NEC Corporation 2009 1Q Network Systems Business （Billions of Yen） ▐ Sales 175.0 Sales YoY 234.8 VBusiness for Telecom Carriers Sales decreased due to CAPEX cutbacks from Japanese mobile operators and for PASOLINK, a shrinking market for optical telecommunication systems and the appreciating yen. 218.7 -6.9% (-20.0%) -20.0% 175.0 Operating Income/Loss Performance of NGN was steady. 14.4 VBusiness for Enterprises 0.5 Sales decreased both in Japan and overseas markets due to continuous CAPEX cutbacks related to the global financial crisis. -3.5 ▐ Operating Loss -3.5 FY08/3 1Q Page 16 FY09/3 1Q FY10/3 1Q (-4.0) V Operating Income fell due to sales decreases, despite reducing fixed costs. © NEC Corporation 2009 1Q Social Infrastructure Business （Billions of Yen） ▐ Sales Sales YoY 60.5 59.8 -1.1% 57.2 (-4.3%) V Broadcast and Control systems: Sales of broadcasting systems decreased and investment restraint by Commercial TV operators continued. 57.2 -4.3% Z Aerospace and Defense： Steady progress. Maintained the same level as the previous year. Operating Income/Loss 1.3 -2.4 -0.4 ▐ Operating Loss -0.4 (+2.0) U Improved by cost reduction and decreasing SG&A. FY08/3 1Q Page 17 FY09/3 1Q FY10/3 1Q © NEC Corporation 2009 1Q Personal Solutions Business (Billions of Yen) Sales YoY Shipments decreased due to the shrinking handset market. -17.1% +5.1% 195.0 V PC and Others: 105.8 84.0 Terminals Shipments decreased mainly for business use terminals. -11.9% Operating Income 93.2 8.7 ▐ Operating Income 8.7 (+2.8) 7.2 5.9 PC and 139.8 129.5 Others Page 18 -21.4% 101.8 FY08/3 1Q 195.0 (-17.1%) V Mobile Terminals: 235.3 223.8 Mobile ▐ Sales FY09/3 1Q U Increased due to reduction of fixed costs (improvement of development efficiency and cost reduction etc.) FY10/3 1Q © NEC Corporation 2009 ＜ Mobile Handset / PC Shipments ＞ （M = Millions of Units) 2 1.5 Mobile Handsets 1.6 1.2 0.9 1 0.5 1.6 1.2 1.1 4.8M units 1.3 1.3 1.0 5.1M units 5.0M units (forecast) 0 1Q/07.3 1000 3Q 4Q 1Q/09.3 2Q 3Q 4Q 1Q/10.3 720 550 2Q 3Q 4Q （K = Thousands of units) PCs (for the Japanese market) 800 600 2Q 810 620 645 620 615 590 500 400 2,670K units 200 2,500K units 2,500K units (forecast) 0 1Q/07.3 2Q 3Q 4Q 1Q/09.3 2Q 3Q 4Q 1Q/10.3 2Q 3Q 4Q * Forecast as of July 30, 2009 Page 19 © NEC Corporation 2009 1Q Electron Devices Business ▐ Sales （Billions of yen） Sales V Semiconductors (NEC Electronics): Drop in the sale of all products, although the recovery of orders slightly exceeded expectations YoY 208.9 203.7 -2.5% -40.0% V Electric Components/Others: Sales decreased largely due to company concentration on its core competencies 122.2 ▐ Operating Loss -27.6 (-26.0) Operating Income/Loss -1.5 122.2 (-40.0%) V Semiconductors (NEC Electronics) : -1.7 In spite of a large decrease in income, actual losses ended within the scope of expectations due to reduced fixed costs -27.6 V Electric Components/Others: FY08/3 1Q Page 20 FY09/3 1Q FY10/3 1Q © NEC Corporation 2009 Profit fell due to decreased sales, but actual losses ended within the scope of expectations < Financial Results for NEC Electronics > （Billions of yen） Sales 167.3 166.3 127.3 102.0 85.5 Operating Income/Loss 1.7 1Q -0.5 -16.2 2Q 3Q FY09/3 -53.3 4Q -20.9 1Q FY10/3 *The results for the area of Semiconductors are the official public figures of NEC Electronics Corporation, which are prepared in accordance with U.S. GAAP. Page 21 © NEC Corporation 2009 Overview of Financial Results for 1Q (Summary) ▐ 1Q results surpassed our original plan z Sales from all segments exceeded our original plan, mainly in Personal solutions, Network systems and IT services z Operating income/loss in almost all segments was better than the original forecast, mainly in Personal solutions, IT services and Electron devices z Steady progress in reducing all expenses; mainly fixed costs Favorable start for achieving full year forecasts Page 22 © NEC Corporation 2009 II. Financial Forecast Summary Management Policy for FY10/3 ▐ Reinforced earnings structure reform z Drastic reduction of fixed costs by 270 billion yen z Removal of unprofitable business / Improve profitability of healthy business ▐ Business portfolio reform towards new growth z Accelerate ‘Selection and Concentration’ of group businesses through business portfolio reform z Innovate businesses towards the next term of growth Realize earnings structure reform and business portfolio reform together Achieve 100 billion yen operating profit and restore net profit * Forecast as of July 30, 2009 Page 24 © NEC Corporation 2009 Summary of Financial Forecast for 1H/Full Year Forecast (Billions of Yen) 1st Half Net Sales Operating Income/Loss To net sales(%) Ordinary Income/Loss To net sales(%) Net Income/Loss To net sales(%) FY09/3 FY10/3 Actual Forecast Full Year YoY FY09/3 FY10/3 Actual Forecast YoY 2,127.8 1,650.0 -22.5% 4,215.6 3,730.0 -11.5% 13.4 -40.0 -53.4 -6.2 100.0 106.2 0.6% 7.0 - -62.0 0.3% 1.8 0.83 FCF -59.6 (Ref): Assumed exchange rate for FY10/3 -69.0 -93.2 - -50.0 0.1% Net Income/Loss per share(yen) - -296.6 - -24.71 60.0 - -51.8 153.2 1.6% 10.0 - -25.54 2.7% 306.6 0.3% -146.64 4.94 151.58 -145.8 0.0 145.8 1$=¥90, 1€=¥120 * Forecast as of July 30, 2009 (Note: Unchanged from previous forecasts of May 12) Page 25 © NEC Corporation 2009 Forecast Summary of Financial Forecast for 1H/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 FY09/3 Actual 420.9 10.3 2.4% 126.3 11.2 Electron Devices Operating Loss Sales Others Operating Income OP Margin(%) Eliminations/Unclassifiable expense Operating Loss Sales Total Operating Income/Loss OP Margin(%) -7.3% -5.3 1.3% 8.8% 3.0% 0.2% 454.5 -1.5 - 410.4 -0.6 - 0.6% -21.4 2,127.8 13.4 0.6% -21.2% -1.7 1,001.8 42.0 -15.7% 0.7 340.4 8.2 -34.2% -30.4 671.6 -87.8 40.0 1.0 144.8 5.8 0.4 -22.5% -53.4 -38.8 4,215.6 -6.2 2.5% -21.0 1,650.0 -40.0 - 6.5% -13.2% 6.0 5.5% -10.7% 4.8 4.3% -8.9% 27.2 1.8% 582.0 -5.0 - -45.0% 0.5 -19.3% -7.8 773.0 14.0 - - 5.6% 304.0 13.0 2.4% 848.6 -13.2 -5.4% -6.0 870.0 48.0 4.2% -21.9% 2.5 YoY 215.0 14.0 8.2% 0.3% 270.0 -31.0 72.7 0.5 266.5 21.8 0.8% 355.0 1.0 FY09/3 Actual 941.8 56.0 -36.7% -20.2 3.3% 125.0 1.0 Full Year FY10/3 Forecast 891.0 50.0 5.9% - 390.0 13.0 148.2 0.3 OP Margin(%) YoY 80.0 -9.0 494.9 14.7 OP Margin(%) Sales 1st half FY10/3 Forecast 390.0 5.0 -13.3% 82.8 - 95.0 3.0 4.0% 3.2% -37.0 3,730.0 100.0 - -34.4% -2.8 1.8 -11.5% 106.2 2.7% * Forecast as of July 30, 2009 Page 26 © NEC Corporation 2009 SI Business Trends by Sector (IT Services and IT Products) ▐ ▐ Continuing trend of severe IT investment restraint Ensure profitability reform through execution of SI innovation and cost reduction Sector 1H Forecast Sales: YoY -14.1% Operating Income/Loss: YoY -25.5 billion Yen Business situation Government IT investment is increasing with supplemental budgets. Strengthen our approach towards entering these budgets. Drive to globally sell our biometrics solutions by launching new fingerprint identification systems. Public sector /Medical Solid demand for core system reconstruction as part of cost reduction, even as local governments cut back on budgets due to declining tax revenues. Focus on expansion of service business, such as ASP for the public sector. Finance Continuing trend of IT investment restraint, even as finance sector indexes slightly improve. Promote service business by utilizing cooperative systems. Telecom/Media Continuing trend of IT investment restraint in both the Telecom and Media sector as well as some project postponement. Strengthen new business, including digital signage and cloud oriented business, for global carriers. Manufacturing Limited investment in high priority areas such as the environment and compliance. Strengthen global business through collaboration with SAP and “REACUBE” platform service proposals. Retail/Service Stable demand and investment in real-time management systems and inventory allocation systems dedicated to cost reduction. Expand global sales through collaboration with Centric in the Netherlands. Strengthen new RFID and electric money services. * Forecast as of July 30, 2009 Page 27 © NEC Corporation 2009 1H Forecast Network Systems Business Trends Sales: YoY -21.2% ▐ Expected sales decrease due to cutbacks in CAPEX by carriers Operating Income: YoY -17 billion Yen and enterprises both in Japan and overseas. ▐ Aiming to maintain 09/1Q’s profitability through project management enhancement and cost reduction; mainly in business for enterprises. Business situation Business for Telecom Carriers Fixed line (in Japan) Performance of NGN is steady, however, sales are expected to decrease throughout most sectors, other than large telecom carriers. Wireless (in Japan) Expected sales decrease due to CAPEX cutbacks by mobile operators. Fixed line (overseas) Expected sales decreases in such areas as optical telecommunication systems. Decrease in submarine cable system sales due to small projects taking place in 1H. However, performance is in accordance with expectations. Continuous impact of the appreciating yen Wireless (overseas) Business for Enterprises Expected sales decrease due to base station shipment decline. Decrease in sales of PASOLINK due to CAPEX cutbacks, price reduction etc. However, shipments remain stable on a unit basis, despite tough competition. Expected sales decrease due to continuous CAPEX cutbacks both in Japan and overseas markets. * Forecast as of July 30, 2009 Page 28 © NEC Corporation 2009 1H Forecast Personal Solutions Business Trends ▐ Mobile Terminals z Continuation of severe conditions during 1Q in the Japanese market (Shipment figures: roughly 85% of the same period yoy) Project 1H market decline at the same level as 1Q z Maintain original shipment targets, despite severe 1H market conditions N-08A 13.9mm thinness Elegant Slim mobile ▐ PCs z Japanese market shrunk during 1Q (Shipment figures: roughly 90% yoy) Projected 1H market decline at the same level as 1Q z Consumer market is favorable due to the expansion of “Net book,” yet the severe trend continues for the business PC area. Aim to maintain original shipment targets LaVie L -. Blue ray disk drive -. Full HD LCD panel * Forecast as of July 30, 2009 Page 29 © NEC Corporation 2009 Summary ▐ Change towards a robust profit structure ▐ Change business structure to pursue growth Putting the NEC Group Core Values into practice Aim to meet the earnings forecast for FY10/3, concentrate on core competencies in order to support the next phase of growth Pursuing the NEC Group Vision 2017 Page 30 © NEC Corporation 2009 < Ref. > Financial Forecast (Appendix) 1H Forecast Financial Forecast for 1H by Segment Net Sales 2,140.6 Operating Income/Loss 27.4 2,127.8 IT Services IT Services IT Products Network Systems 406.7 110.5 508.2 420.9 1,650.0 126.3 Personal Solutions 149.9 Personal Solutions 390.0 494.9 442.9 148.2 454.5 Network Systems 430.7 10.3 Others 3.1 2.9 8.5 -4.2 -1.0 390.0 Social Infrastructure 125.0 -19.3 91.8 FY08/3 -40.0 5.0 14.7 13.0 0.30.5 -1.5-0.6 1.0 1.01.0 -9.0 -21.4 -31.0 Electron Devices 410.4 Eliminations/ Unclassifiable expenses 270.0 Others IT Products 24.8 355.0 Electron Devices 13.4 11.2 80.0 Social Infrastructure 12.7 （Billions of yen） 72.7 40.0 FY09/3 FY10/3 (Forecast) FY08/3 FY09/3 -21.0 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 34 © NEC Corporation 2009 1H Forecast Sales Change (Year on Year) （Billions of yen） FY09/3 1H 2,127.8 IT Services -30.9 (-7.3%) IT Products -46.3 (-36.7%) Network Systems -104.9 (-21.2%) Social Infrastructure -23.2 (-15.7%) Personal Solutions -99.5 (-21.9%) FY10/3 1H (Forecast) Electron Devices -140.4 (-34.2%) 1,650.0 Others -32.7 * Forecast as of July 30, 2009 Page 35 © NEC Corporation 2009 Operating Income/Loss Change (Year on Year) （Billions of yen） FY09/3 1H 13.4 1H Forecast IT Services -5.3 FY10/3 1H (Forecast) IT Products -20.2 -40.0 Social Infrastructure +0.7 Personal Solutions +2.5 Network Systems -1.7 Electron Devices -30.4 Others +0.5 Eliminations/ Unclassifiable expenses Page 36 © NEC Corporation 2009 +0.4 * Forecast as of July 30, 2009 1H Forecast Net Income/Loss Change (Year on Year) （Billions of yen） FY10/3 1H (Forecast) FY09/3 1H 1.8 Deterioration of operating loss -53.4 -50.0 Electron Devices -30.4 IT Products -20.2 IT Services -5.3 Deterioration of non-operating loss -15.6 Others +17.2 Taxes, Minority interests and others Exchange gains and losses, Net equity investment and others * Forecast as of July 30, 2009 Page 37 © NEC Corporation 2009 Forecast by Segment Forecast IT Services Business 1H Full Year Sales （Billions of yen） Sales YoY 960.5 420.9 406.7 941.8 390.0 +3.5% -1.9% -7.3% -5.4% Operating Income Operating Income 12.7 891.0 65.9 10.3 56.0 50.0 5.0 FY08/3 1H FY09/3 1H FY10/3 1H (Forecast) FY08/3 FY09/3 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 39 © NEC Corporation 2009 1H Forecast IT Services Business ▐ Sales 390.0 (-7.3%) （Billions of yen） V SI Services: Decline through IT investment restraint Stable in Government, Public/Medical sector V Outsourcing/Support services: Decline in sales due to severe market conditions Aim to secure the stable sales of outsourcing business ▐ Operating Income 5.0 (-5.3) V Expect operating income to decrease due to sales decline Steady improvement in the Government sector * Forecast as of July 30, 2009 Page 40 © NEC Corporation 2009 Forecast IT Products Business 1H Full Year Sales （Billions of yen） Sales YoY 126.3 266.5 251.9 110.5 +5.8% +14.4% -19.3% -36.7% 80.0 215.0 21.8 11.2 Operating Income/Loss -4.2 FY08/3 1H 14.0 Operating Income -9.0 FY09/3 1H FY10/3 1H (Forecast) 8.1 FY08/3 FY09/3 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 41 © NEC Corporation 2009 1H Forecast IT Products Business ▐ Sales 80.0 (-36.7%) （Billions of yen） V Software: Drop in sales, especially mainframe related products V Servers: Decrease significantly due to sales drop of mainframes Aim to expand sales of thin-client systems and security products V Others: Drop in sales of peripherals Steady sales of professional workstations ▐ Operating Loss -9.0 (-20.2) V Significantly greater loss mainly due to loss of a large mainframe project compared to the previous year * Forecast as of July 30, 2009 Page 42 © NEC Corporation 2009 Forecast Network Systems Business 1H Full Year Sales Sales 508.2 -2.6％ YoY 1,066.8 494.9 （Billions of yen） 1,001.8 -6.1％ -21.2％ 870.0 390.0 Operating Income Operating Income 24.8 69.0 14.7 FY08/3 1H -13.2％ FY09/3 1H 42.0 13.0 FY10/3 1H (Forecast) FY08/3 FY09/3 48.0 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 43 © NEC Corporation 2009 1H Forecast Network Systems Business ▐ Sales 390.0 ( -21.2%) V Business for Telecom Carriers: Sales decrease due to CAPEX cutbacks by Japanese mobile operators and the appreciating yen PASOLINK maintains steady sales in unit basis in the face of tough competition, CAPEX cutbacks by operators and price reductions Sales of overseas optical telecommunication systems are down due to the shrinking market Performance of NGN is steady V Business for Enterprises: Sales decrease both in Japan and overseas markets due to continuous CAPEX cutbacks stemming from the global financial crisis. ▐ Operating Income 13.0 ( -1.7) V Aim to maintain the same level of profitability as the previous year by cutting fixed costs etc., despite declining sales * Forecast as of July 30, 2009 Page 44 © NEC Corporation 2009 Forecast Social Infrastructure Business 1H Full Year Sales Sales （Billions of yen） YoY 149.9 365.5 148.2 -6.9% 125.0 -1.1％ 340.4 304.0 -10.7% -15.7％ Operating Income Operating Income/Loss -1.0 FY08/3 1H 14.4 0.3 FY09/3 1H 13.0 1.0 8.2 FY10/3 1H (Forecast) FY08/3 FY09/3 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 45 © NEC Corporation 2009 1H Forecast Social Infrastructure Business ▐ Sales 125.0 (-15.7%) Sales decrease due to economic deterioration and appreciation of the yen V Broadcast and Control system / Aerospace and Defense Aim to reach the revised budget goals ▐ Operating Income 1.0 (+0.7) U Improvement by reducing costs and SG&A. Aim for high margin projects, especially in overseas markets, with profitability as a top priority * Forecast as of July 30, 2009 Page 46 © NEC Corporation 2009 forecast Personal Solutions Business 1H Full Year Sales Sales +2.6％ Mobile YoY 454.5 442.9 150.4 930.8 -21.9％ 848.6 355.0 181.2 Mobile Terminals 773.0 -8.8％ -8.9％ 340.3 Terminals 348.1 295.0 145.0 -15.3％ -20.0％ PC and Others Operating Income/Loss -23.2％ 292.5 PC and 273.3 3.1 Others 210.0 -1.5 FY08/3 1H (Billions of Yen) FY09/3 1H 1.0 FY10/3 1H (Forecast) Operating Income/Loss -4.5％ 590.5 17.6 500.5 478.0 14.0 -13.2 FY08/3 FY09/3 FY10/3 (forecast) * Forecast as of July 30, 2009 Page 47 © NEC Corporation 2009 Personal Solutions Business 1H forecast (Billions of Yen) ▐ Sales 355.0 (-21.9%) V Mobile Terminals: Decrease due to shipment declines and a changing product mix V PC and Others: Decrease due to effect of lower business investment ▐ Operating Income 1.0 (+2.5) U Secure profitability through reducing fixed costs, even as shipments drop and the product mix faces challenges * Forecast as of July 30, 2009 Page 48 © NEC Corporation 2009 Forecast Electron Devices Business 1H Full Year Sales （Billions of yen） Sales 430.7 860.0 410.4 -4.7% YoY 671.6 -34.2% -21.9% 270.0 -13.3% 582.0 Operating Income/Loss Operating Income/Loss 8.4 2.9 -0.6 FY08/3 1H FY09/3 1H -87.8 -31.0 FY10/3 1H (Forecast) FY08/3 FY09/3 -5.0 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 49 © NEC Corporation 2009 Electron Devices Business 1H Forecast （Billions of yen） ▐ Sales 270.0 (-34.2%) V Semiconductors: Although orders are increasing, the business environment is still severe and large sales declines are expected V Electric Components /Others: Forecast a large decrease in sales due to the continuation of customers’ product and inventory adjustments and the reduction of investment in plants and equipment. Yet, signs of growth in demand exist. ▐ Operating Loss -31.0 (-30.4) V Semiconductors: Expect profit to decline due to decreasing sales, but to remain within the scope of expectations due to fixed cost reductions. V Electric Components/Others : Expect profit to decline due to decreasing sales. Structure reform is making steady progress * Forecast as of July 30, 2009 Page 50 © NEC Corporation 2009 Full Year Forecast Full Year Forecast by Segment Net Sales Operating Income/Loss 156.8 4,617.2 4,215.6 IT Services IT Products Network Systems Social Infrastructure Personal Solutions 960.5 941.8 Others 3,730.0 65.9 266.5 1,066.8 891.0 870.0 304.0 671.6 14.4 17.6 8.4 14.7 42.0 8.2 5.8 -13.2 -41.3 Eliminations/ Unclassifiable expenses 773.0 Electron Devices 100.0 50.0 14.0 21.8 340.4 860.0 69.0 Social Infrastructure Personal Solutions Others 1,001.8 930.8 56.0 Network Systems 215.0 365.5 -6.2 8.1 IT Products 251.9 848.6 Electron Devices IT Services （Billions of yen） 48.0 13.0 14.0 3.0 -5.0 -37.0 -87.8 582.0 -38.8 181.7 144.8 95.0 FY08/3 FY09/3 FY10/3 (Forecast) FY08/3 FY09/3 FY10/3 (Forecast) * Forecast as of July 30, 2009 Page 51 © NEC Corporation 2009 Full Year Forecast Sales Change (Year on Year) （Billions of yen） FY09/3 4,215.6 IT Services -50.8 (-5.4%) IT Product -51.5 (-19.3%) Network Systems -131.8 (13.2%) Social Infrastructure -36.4 (-10.7%) FY10/3 (Forecast) Personal Solutions -75.6 (-8.9%) Electron Devices -89.6 (-13.3%) 3,730.0 Others -49.8 * Forecast as of July 30, 2009 Page 52 © NEC Corporation 2009 Operating Income/Loss Change (Year on Year) Full Year Forecast （Billions of yen） Eliminations/ Unclassifiable expenses +1.8 Others -2.8 IT Products -7.8 IT Services -6.0 FY09/3 FY10/3 (Forecast) 100.0 Electron Devices +82.8 Personal Solutions +27.2 -6.2 Network Systems +6.0 Page 53 Social Infrastructure +4.8 * Forecast as of July 30, 2009 © NEC Corporation 2009 Full Year Forecast Net Income/Loss Change (Year on Year) （Billions of yen） FY10/3 (Forecast) FY09/3 10.0 -296.6 Others +153.4 Improvement non-operation profit/loss +47.0 Decrease of Loss on valuation of investment expenses and business structure improvement expenses Losses related to litigation in the previous year Gain of operating profit +106.2 Electron Devices +82.8 Personal Solutions +27.2 * Forecast as of July 30, 2009 Page 54 © NEC Corporation 2009 Other Financial Data (Billions of Yen) 09/3 Difference from 09/3 08/6 3,075.4 2,884.9 -190.4 3,397.4 Net Assets 785.6 759.8 -25.7 1,187.1 Interest-bearing debt 925.2 922.2 -2.9 785.2 Owner's Equity 641.7 623.7 -17.9 1,005.7 Total Assets Equity ratio (%) Page 55 09/6 20.9% 21.6% 0.7 29.6% D/E ratio 1.44 1.48 -0.04 0.78 Net D/E ratio 0.95 1.05 -0.10 0.43 © NEC Corporation 2009 Full Year Forecast < Ref.> Capital Expenditures and Others （Billions of Yen: %） FY08/3 FY09/3 Actual Actual FY10/3 YoY Forecasts YoY Capital Expenditure 122.6 103.1 -15.9% 100.0 -3.0% Depreciations 147.8 133.6 -9.6% 110.0 -17.7% R&D expenses 352.2 346.5 -1.6% 280.0 -19.2% （Billions of Yen: %） FY09/3 1Q Actual R&D expenses FY10/3 1Q Actual YoY 86.2 - 71.8 YoY -16.7% * Forecast as of July 30, 2009 Page 56 © NEC Corporation 2009 < Ref.> Topics and Achievements Global Expansion of Cloud Computing Business for Telecom Carriers 1Q ▐ Won an SaaS project from Telefonica z NEC will construct and provide the infrastructure platform for a range of application software targeting businesses and homes via SaaS platforms. z Telefonica will provide a variety of business application software, such as CRM and asset management tools, as SaaS business for small to mid sized companies. The range of business applications is scheduled to increase in the future. z NEC and Telefonica are slated to jointly expand such areas as PaaS and DaaS, which are highly valued aspects of the growing cloud computing field. Provide new business models and services by integrating business partners’ assets and NEC’s IT/NW solutions * Announced on July 13, 2009 Page 58 © NEC Corporation 2009 Enhancement of the NEC Group’s Domestic Sales Force 1Q ▐ Reformed solution business structure for the enhancement of our domestic sales force z Integrate the sales functions of the SMB market in Tokyo, Nagoya and Osaka into NEC Nexsolutions z Integrate the sales functions for large enterprises into NEC z Integrate the NEC group’s sales functions outside of Tokyo, Nagoya and Osaka into each regional NEC office Establish a single sales window and appropriate business structure for each market (Aim to exceed the market growth rate with more than 5% sales growth in the SMB market) * Announced on July 6, 2009 Page 59 © NEC Corporation 2009