Presentation

Financial Results for 3Q of FY09/3
and Full Year Financial Forecast
January 30, 2009
NEC Corporation
(http://www.nec.co.jp/ir/en)
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
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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 (iv) 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.
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© NEC Corporation 2009
Index
Summary of Financial Results for 3Q
Full Year Financial Forecast
Management Reforms for the Next Term
3
© NEC Corporation 2009
3Q Results
Summary of Results for 3Q/9 Months Total
3Q Result
Net Sales
Operating
Income/Loss
(% to Net Sales)
Ordinary
Income/Loss
(% to Net Sales)
Net Loss
(% to Net Sales)
FY08/3
FY09/3
Actual
Actual
9 Months Total
YoY
FY08/3
FY09/3
Actual
Actual
1,052.2
948.3
-9.9%
3,192.8
3,076.1
-3.7%
16.0
-24.8
-40.8
43.4
-11.4
-54.8
1.5%
9.5
-
-49.8
0.9%
-5.2
-59.3
-
-130.8
-
1.4%
19.3
-
-42.8
0.6%
-125.5
-10.0
-
(Ref): Average exchange rate for 3Q/FY09.3
1$= ¥100.03, 1€= ¥136.09
Average exchange rate for 9months/FY09.3 1$= ¥104.00, 1€= ¥152.18
(Assumption of exchange rate for 3Q/FY09.3 1$=¥105, 1€=¥140)
4
YoY
© NEC Corporation 2009
-62.1
-
-129.0
-
-119.0
-
3Q Results
Overview of Results for 3Q
（Billions of yen)
Net Sales
948.3 (yoy -9.9%)
Operating Income -24.8 (yoy -40.8)
X IT/NW Solutions
• 3Q mostly consistent with forecasts. Rapid conservative shift of
company investment for 4Q.
X Mobile/Personal Solutions
• Factor in further stagnation of mobile markets.
X Electron Devices (Semiconductor, Electric Components, etc.)
• Business impacted by abrupt market slowdown
X Further appreciation of the yen and slumping stock market
Circumstances cause revision of the FY09/3 forecast
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© NEC Corporation 2009
Full Year Financial Forecast
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© NEC Corporation 2009
Revised Financial Forecasts
■ FY09/3 full year
Full year forecast
（ Billions of yen）
Forecast as of
October 30, 2008
Revised Forecast
Difference
Previous
Fiscal Year
YoY
（Ａ）
（Ｂ）
（Ｂ-Ａ）
(FY08/3)
（%, Billions of yen）
Net Sales
4,600
4,200
-400
4,617.2
-9.0%
Operating
Income/Loss
120
-30
-150
156.8
-186.8
Ordinary
Income/Loss
95
-90
-185
112.2
-202.2
Net
Income/Loss
15
-290
-305
22.7
-312.7
(Ref): Assumption of exchange rate for 4Q/FY09.3 1$=¥90, €1=¥120
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Sales Change
Full year forecast
（From previous forecast）
(Billions of yen)
Previous Forecast
4,600
Electron Devices
-145
NEC Electronics -105
NEC TOKIN
-19.7
IT/NW Solutions
-110
Mobile/Personal Solutions
-110
NW Systems
IT Products
IT Service/SI
-60
-30
-20
New Forecast
Personal Solutions
Mobile Terminals
-60
-50
4,200
Others
-35
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Operating Income/Loss Change
Full year forecast
（From previous forecast）
(Billions of yen)
Previous Forecast
120
Electron Devices -77
NEC Electronics -56
NEC TOKIN
-9.2
IT/NW Solutions
-36
NW Systems
IT Service/SI
Social Infrastructure
IT Products
Mobile/Personal Solutions
-17
approx. -15
approx. -9
approx. -7
approx. -5
Mobile Terminals
Personal Solutions
New Forecast
-30
approx. -9
approx. -8
Others
-２０
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Full Year Forecast by Segment
Net Sales
4,617.2
Operating Income/Loss
156.8
Full year forecast
(Billions of yen)
YoY
-186.8
-9.0%
4,200
-30.0
160.6
2,866.2
-49.6
-4.1%
2,750
IT/NW Solutions
23.2
7.4
- 34.4
872.9
830.9
47.2
FY08/3
-7.2%
-23.0%
810
640
0
FY09/3
（forecast）
111
IT/NW Solutions
-8
Mobile/Personal
Solutions
-31.2
Mobile/Personal
Solutions
-84.4
- 77
Electron Devices
Electron Devices
-21.6
- 56
Others/Eliminations
Others/Eliminations
FY08/3
FY09/3
（forecast）
※ Forecast as of January 30,2009
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© NEC Corporation 2009
SI Business Trends by Sector
（IT Service/SI, IT Products）
Full year forecast
Operating Income: -14 from last forecast, -1 year on year
Finance, Telecom/Media, Manufacturing perform below former expectations. Local / medium and
small-sized businesses, server /PC businesses rapidly decline. Ex. Postponement and
cancellation of facility updates
Sector
Sales forecast
（year on year）
Background and NEC Approach
Government
Strict budgetary conditions continue. Sales increase by acquisition of large-scale business.
Continue with new proposals for field system optimization, social security, disaster prevention etc.
Public sector
/Medical
Customer finances contribute to strict conditions, but sales prospects increase through
expansion of core computer systems (including replacements) for the public sector.
Finance
New subjects halt and strict conditions spread mainly through securities and insurance.
Telecom/
Media
Tendency to restrain investment in equipment. Aim at entering new business centered on
NGN and business that creates unity with customers.
Manufacturing
Third Quarter investment restraint becomes clear. Need for strengthening order in
security and compliance, BC/DR which are essential for continuing business.
Retail/
Service
Alleviate customer investment concerns through service reinforcement such as the
introduction of electronic money, new business cooperation, mergers and acquisitions.
Local / medium and small
sized business
Server /PC business rapidly worsens. Ex. Postponement and cancellation of facility
updates.
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009. Arrows in figure represent year on year
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© NEC Corporation 2009
Network System Business Trends
Full year forecast
Operating Income: -15 from last forecast, -43 year on year
Telecom carriers business nearly in line with the previous forecast, but deeper impact on
operating income from the appreciating yen
Drastic enterprise investment cutbacks impact profitability
Sales forecast
(year on year)
Business situation
Business for
Telecom Carriers
Fixed line
(in Japan)
・Steady growth of NGN related business (e.g. switching systems, optical
transmission systems)
・Access area sales fall slightly short of previous forecasts
Wireless
(in Japan)
・Decrease in sales under mobile carriers CAPEX cutbacks
・NCCs cutbacks still expanding
Fixed line
(overseas)
・Increase in sales from steady growth in submarine cable systems
・North American telecom carrier CAPEX still decreasing
Wireless
(overseas)
Greater impact of the
・Decrease in sales by reduction of base station
appreciating yen
shipments
・Slight PASOLINK sales decrease despite shipment growth
due to strong yen
Business for Enterprises
Decrease of CAPEX for enterprise network systems in Japan and overseas
(e.g. North America, Europe) from the 2nd half of this fiscal year
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009. Arrows in figure represent year on year
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© NEC Corporation 2009
Mobile Terminal Business Trends
Full year forecast
Operating Income/Loss: -9 from last forecast, -14 year on year
(Millions of units)
Japanese Market
49.33
46.25
50.76
Forecast in May
46
33 ～35
10%
7
9%
5.8
NEC’s Shipments
Over 7
Nearly 5
FY06/3
Aim to secure profitability next year in
a difficult business environment by:
14～ 15%
15%
FY07/3
4.8
5.0
FY08/3
FY09/3
（forecast）
（33M～35M units, -30% year on year）
Downward revision of shipment plan
（5.0M, same level with last year）
Steady growth of market share in
severe market conditions
Forecast in October
38
NEC’s Share
Further reduction of Japanese market
X Further expansion of market share by
launching strong products
X Further streamlining of development
and reducing the break-even point
※ Source: MM Research Institute (FY06/3-FY09/3), NEC (FY09/3)
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Personal Solution Business Trends
Full year forecast
Operating Income/Loss: -8 from last forecast, -17 year on year
PC Business in Japan: Maintain profitability amongst severe price competition
X Shipment of consumer PCs will grow year on year
despite a large drop in business PCs
X Maintain No.1 market share in Japan
PC Business in Europe: Greater losses from sales decrease
X Considering drastic action
《 Direction of PC Business 》
Accelerate support of new market development
Strengthen cooperation between PC and mobile handsets
⇒ Develop new devices for specific markets through cooperation
with NEC’s solution team
⇒ Develop new open platform products
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Full year forecast
Electron Device Business Trends
Operating Income/Loss: -77 from last forecast, -84.4 year on year
NEC Electronics
NEC TOKIN
Revised downward due to deteriorating
economy and impact of higher yen
Sales
687.7
685.0
660.0
555.0
Revised downward due to deteriorating
economy from the 2nd half, declining
demand for major electronic components,
and adjustment of production/
Diff. from
inventory
previous forecast
Sales 120.0
126.0
114.0
-105
5.1
Operating
Income/Loss
10.0
（Billions of yen）
94.3
-19.7
1.0
0.6
Operating
Income/Loss
-56
3.2
0.9
-9.2
-55.0
FY08/3
FY09/3
FY09/3
(Initial plan) (Previous
forecast)
15
FY09/3
-8.3
FY08/3
FY09/3
FY09/3
FY09/3
(New
(Initial plan) (Previous
(New
forecast)
forecast)
forecast)
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
© NEC Corporation 2009
New Management Measures at
NEC Electronics
Cut 80 billion yen of overhead costs in the next two years
X FY10/3 : Cut 60 billion yen of overhead costs
• Cut production costs （approx. 30 billion yen）
• Cut R&D costs （approx. 20 billion yen）
• Cut other company costs （approx. 10 billion yen）
X FY11/3 : Cut 20 billion yen of overhead costs in a year
(Lower the break-even point of FY11/3 to approx. 500 billion yen)
Accelerate restructuring of production systems
Concentrate managerial resources on “eco Products”
that deliver energy-savings and ecological value
* Announced by NEC Electronics on January 29, 2009
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© NEC Corporation 2009
Rebuilding Plans for NEC TOKIN
Take decisive action to restructure
X Selection and Focus of business （Withdraw from 2 unprofitable product
areas）
X Reorganization of footholds （Close 3 domestic production footholds and
5 business footholds）
X Employment downsizing （approx. 9,500 people; early retirement for 450
domestic staff, Overseas restructuring 9,000）
Stabilize management foundations
X Capital increase by third-party allotment （allotted to NEC, 38 billion Yen）
X Make NEC TOKIN a wholly owned NEC subsidiary through a stock swap
Execution of growth strategy
X Magnify business in Environment/Energy markets
X Develop new products through original technology and market
introductions
* Announced by NEC TOKIN on January 27, 2009
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© NEC Corporation 2009
Net Income Change （from previous forecast）
Full year forecast
(Billions of yen)
Previous Forecast
15
Business performance declines
（Ordinary income after tax）
-110
New Forecast
-290
Restructuring cost -55
NEC TOKIN -26
Appraisal loss -140
Liquidation of deferred tax assets
Goodwill of Nippon Electric Glass etc.
-88
-52
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Non-Consolidated Financial Forecast
Revision
■ FY09/3
Full year forecast
（ Billions of yen）
Previous
Forecast
New forecast Difference
（Ａ）
（Ｂ）
Actual FY08/3
Difference
(%, Millions of yen)
（Ｂ-Ａ）
2,360
2,260
-100
2,352.6
-3.9%
Operating
Income/Loss
18
-20
-38
48.4
-68.4
Ordinary
Income/Loss
20
-25
-45
53.2
-78.2
Net
Income/Loss
12
-490
-502
-9.1
-480.9
Net Sales
NEC to withhold dividends for the FY09/3
due to the decline of common equity from negative earnings
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
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© NEC Corporation 2009
Management Reforms for the
Next Term
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© NEC Corporation 2009
① Business Portfolio Reform
Business portfolio review
X Business selection & concentration towards an information
linked society friendly to people and the earth
© NEC Corporation 2009
Exiting areas
Mobile/Personal
Semiconductors
Solutions
(LCD related business etc.)
New core area
(Environment & energy business)
21
IT/NW
Solutions
Direction of NEC Group Management
FY09/3 OP
Estimate
(Billions of Yen)
Lower BEP, Drastic measures
for overseas PC business
Mobile / Personal
Solutions
Reinforced earnings
structure reform
-8
Semiconductors
Electron Devices
IT/NW Solutions
Further restructuring
to improve profitability
-77
Electronic Components etc.
111
Others/Elimination
Selection & concentration
for capital efficiency
-56
※ Forecast as of January 30, 2009
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© NEC Corporation 2009
NEC Semiconductor Business
<Position>
Favorable position over competitors as NEC has common
technologies and a strong customer base across IT, networks and
semiconductors
Ubiquitously linked network requirements for unified systems,
solutions and semiconductors
Secure orders through an integrated NEC group (including NEC Corp.
and NECEL) approach to customers
<Basic Policy>
As NECEL’s largest shareholder, NECEL’s performance
has significant impact NEC’s results. Substantial reform is
now required of NECEL and the semiconductor business.
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© NEC Corporation 2009
NEC’s Environment and Energy Business
<Position>
The car battery business of NEC TOKIN is important for
our approach to environmental business and realizing the
NEC group’s philosophy and vision for 2017
Examine every measure of NEC TOKIN business in order
to select & focus on capital efficiency
<Basic Policy>
Stabilize NEC TOKIN’s management base, and swiftly decide
and execute the strategic measures of the NEC group
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© NEC Corporation 2009
② Profitability Reform
Structural improvement to meet NEC Group Vision 2017
X Organizational integration, reduction and functional optimization
of the NEC group through efficient use of management resources
Reduction of SG&A, procurement costs, outsourcing
costs etc.
Reduction of compensation for officers and managers
NEC group work force reduction of over 20,000
(including outsourced work forces)
X Reduction at poorly performing group companies
X Reduce outsourcing through increased in-house development
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© NEC Corporation 2009
Management Reform for FY10/3
Severe external environment continues or worsens
FY10/3 will pose unprecedented challenges for NEC
（The year for innovative NEC group practices to reach our vision and realize our values)
① Business structure reform
＋
Fulfillment at once
② Earnings structure reform
Strategic moves for the next phase of growth
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© NEC Corporation 2009
Full Year Financial Forecast
(Appendix)
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© NEC Corporation 2009
Full year forecast
Summary of Forecast for FY09/3
（ Billions of yen）
9 months total
Full year
FY08/3
FY09/3
Actual
Actual
3,192.8
3,076.1
-3.7%
4,617.2
4,200
-9.0%
Operating
Income/Loss
43.4
-11.4
-54.8
156.8
-30
-186.8
Ordinary
Income/Loss
19.3
Net Income/Loss
-10.0
Net Sales
(% to Net Sales)
(% to Net Sales)
1.4%
FCF
-
-42.8
0.6%
(% to Net Sales)
-62.1
-129.0
FY09/3
Actual
Forecast
112.2
-119.0
22.7
-90
56.5
-202.2
-
-290
0.5%
-61.1
YoY
-
2.4%
-
-197.8
FY08/3
3.4%
-
-
-136.6
YoY
-312.7
-
-190
-246.5
(Ref): Assumption of exchange rate for 4Q/FY09.3 1$=¥90, €1=¥120
※ Forecasts as of January 30, 2009
29
© NEC Corporation 2009
Full Year Forecast by Segment
Net Sales
4,617.2
Operating Income/Loss
156.8
Full year forecast
(Billions of yen)
YoY
-186.8
-9.0％
4,200
-30
160.6
2,866.2
-49.6
-4.1%
2,750
IT/NW Solutions
23.2
7.4
- 34.4
872.9
830.9
47.2
FY08/3
-7.2%
-23.0%
810
640
0
FY09/3
（forecast）
111
IT/NW Solutions
-8
Mobile/Personal
Solutions
-31.2
Mobile/Personal
Solutions
-84.4
- 77
Electron Devices
Electron Devices
-21.6
- 56
Others/Eliminations
Others/Eliminations
FY08/3
FY09/3
（forecast）
※ Forecast as of January 30,2009
30
© NEC Corporation 2009
Full year forecast
Sales Change (Year on Year)
(Billions of yen)
FY08/3
4,617.2
IT Products
-16.8 （-2.8%）
Mobile/Personal Solutions -62.9 （-7.2%）
IT Service/SI
+7.5 （+0.9%）
Network Systems
-86.0 （-7.9%）
Mobile Terminals -10.3 （-3.0%）
Social Infrastructure
-20.9 （-6.1%）
Personal Solutions -52.6 （-9.9%）
Electron Devices
-190.9 （-23.0%）
FY09/3
Forecast
IT/NW Solutions -116.2 （-4.1%）
4,200
Others
-47.2
※ Forecasts as of January 30, 2009
31
© NEC Corporation 2009
Operating Income Change (Year on Year)
FY08/3
156.8
Full year forecast
(Billions of yen)
IT Products
approx. +2.0
Network Systems
approx. -43.0
Mobile/Personal Solutions -31.2
IT Service/SI
approx. -3.0
Mobile Terminals approx. -14.0
Social Infrastructure
approx. -6.0
Personal Solutions approx. -17.0
IT/NW Solutions -49.6
FY09/3
Electron Devices -84.4
-30
(forecast)
Others -21.6
※ Forecasts as of January 30, 2009
32
© NEC Corporation 2009
Full year forecast
IT/NW Solutions Business
（Billions of Yen）
Sales: 2,750 （-4.1%）
Sales
2,866.2
IT Service/SI
IT Products
832.5
606.8
YoY
-4.1％
Operating
Income
2,750
840
＋0.9%
160.6
-2.8%
590
111
Approx. 61
Network
Systems
Approx. 9
1,086.0
1,000
-7.9%
Approx. 78
Social
Infrastructure 340.9
Approx. 13
FY08/3
Approx. 58
Approx. 11
320
Approx. 35
Approx. 7
-6.1%
U IT Service/SI:
Expectations remain flat considering the risks of
a rapid downturn of IT investment.
Apparent suppression of investment, especially
in financial, manufacturing and communications.
V IT Products:
Expected decline due to the slipping economy
and business PC and server investment.
V Network Systems:
Expected decline of sales due to cutbacks in
CAPEX both from mobile operators in Japan and
general enterprises.
Steady growth in NGN related business.
Operating Income: 111（-49.6）
V IT Service/SI:
Flat expectations due to strict project
management and fierce price competition
U IT Products:
Expected growth in high profit products
Recognized R&D costs （next generation servers)
V Network Systems:
Forecast profit decrease from sales declines
and the impact of the stronger yen
FY09/3
(forecast)
* Forecast as of January 30, 2009
33
© NEC Corporation 2009
Mobile/Personal Solutions Business
Full year forecast
（Billions of yen）
Sales
872.9
Mobile
Terminals
YoY
-7.2％
Sales:
V Mobile Terminals:
Japanese handset market shrinks 30% year on
year
Target 4.8 million unit shipments (same level as
last year) by introducing competitive models
V Personal Solutions:
Substantial decline due to severe price
competition and reduction of CAPEX by
enterprises in Japan and overseas sales drop
810.0
Operating
340.3 Income/Loss
330
23.2
-3.0％
approx.11
Personal
Solutions
810 （-7.2%）
Operating Loss:
532.6
480
approx.12
-9.9％
-8
approx. -3
approx. -5
FY08/3
FY09/3
(forecast)
-8 （-31.2）
V Mobile Terminals:
Improve profitability by decreasing development
costs
Forecast slight loss due to increasing costs for
launching a variety of models
V Personal Solutions:
Expect some losses due to declining sales
overseas
Keep profitability in Japanese market
* Forecast as of January 30, 2009
34
© NEC Corporation 2009
Full year forecast
Mobile Handset & PC Shipments
Mobile handsets
2
1.7
1.5
1.2
1.4
1.6
1.3
1.2
0.9
1
0.5
5.6M units
(M = Millions of units)
1.6
1.2
1.1
1.3
0.9
4.8M units
5.0M units (forecast)
0
1Q/07.3
2Q
3Q
4Q
1Q/08.3
2Q
3Q
4Q
1Q/09.3
2Q
3Q
4Q
(forecast)
1000
800
600
PCs (for the Japanese market)
810
640 690 580
720
550
(K = Thousands of units)
810
620 645 620 615
590
400
200
2,720K units
2,670K units
2,500K units (forecast)
0
1Q/07.3
2Q
3Q
4Q
1Q/08.3
2Q
3Q
4Q
1Q/09.3
2Q
3Q
4Q
(forecast)
* Forecast as of January 30, 2009
35
© NEC Corporation 2009
Electron Device Business
Full year forecast
（Billions of yen）
Sales
Sales
830.9
YoY
-23.0%
640
（NEC Electronics）
555
-19.3%
7.4
5.1
2.3
Operating
Income/Loss
FY08/3
85
V Semiconductors :
Drop in sales due to rapidly falling
demand
V Electric Components/Others :
Drop in sales due to market
stagnation after 3Q, customer
product/inventory adjustment
Semiconductors 687.7
Electric
Components/ 143.2
Others
640 （-23.0%）
-77
-40.6%
Operating Income/Loss
-77 （-84.4）
-55.0
V Semiconductors :
Expected decrease from low sales
though cost cutting done at an
accelerated schedule
-22.0
V Electric Components/Others :
Expected decrease from low
sales and currency exchange
FY09/3
(forecast)
*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. The difference that
arises as a result of the adjustment to Japan GAAP is included in Electronic Components and Others.
36
© NEC Corporation 2009
※ Forecast as of January 30, 2009
Full year forecast
《Ref.》 Capital Expenditures and Others
（Billions of yen）
■ FY09/3
Previous forcast New forecast
（Ａ）
Difference
FY08/3
YOY
（Ｂ-Ａ）
Actual
（％）
（Ｂ）
Capital
expenditures
140
140
0
122.6
14.2%
Depreciation
150
150
0
147.8
1.5%
R&D　expenses
360
360
0
352.2
2.2%
Capital Expenditures
149.7
147.8
150.0
140.0
39.2
42.0
45
32
11
14.6
14.5
14
71.4
67
177.5
IT/NW Solutions
Mobile/Personal
Solutions
Electron Devices
24.1
10.5
120.8
122.6
23.9
11.6
71.1
Others/Eliminations
R&D expenses
Depreciation
352.2
360.0
156.5
170
45.8
46
138.0
117.8
112
30.5
32.1
32
FY07/3
FY08/3
FY09/3
（forecast）
334.6
110.4
55.7
78.4
74
22.1
16.0
23
17.5
19.9
24
FY07/3
FY08/3
FY09/3
（forecast）
FY07/3
FY08/3
FY09/3
（forecast）
※Previous forecasts as of October 30, 2008. New Forecasts as of January 30, 2009
37
© NEC Corporation 2009
Financial Results for 3Q
38
© NEC Corporation 2009
3Q Results
Summary of Results for 3Q/9 Months Total
（ Billions of yen）
3Q Result
Net Sales
Operating Income
(% to Net Sales)
Ordinary Income
(% to Net Sales)
Net Income
(% to Net Sales)
FY08/3
FY09/3
Actual
Actual
9 Months Total
YoY
FY08/3
FY09/3
Actual
Actual
1,052.2
948.3
-9.9%
3,192.8
3,076.1
-3.7%
16.0
-24.8
-40.8
43.4
-11.4
-54.8
1.5%
9.5
-
-49.8
0.9%
-5.2
-59.3
19.3
-
-130.8
-
1.4%
-
-42.8
0.6%
-125.5
-10.0
-
(Ref): Average exchange rate for 3Q/FY09.3
1$= ¥100.03, 1€= ¥136.09
Average exchange rate for 9months/FY09.3 1$= ¥104.00, 1€= ¥152.18
(Assumption of exchange rate for 3Q/FY09.3 1$=¥105, 1€=¥140)
39
YoY
© NEC Corporation 2009
-62.1
-
-129.0
-
-119.0
-
3Q Results Overview
3Q Results
（Billions of yen）
Net Sales
948.3
（yoy -9.9%）
V Electron Devices （yoy -26.5%, -56.1）, Others （yoy -19.9） decreased
V Network Systems （yoy -6.6%, -16.1）, Personal Solution （yoy -8.3%, -9.8） decreased
U Mobile Terminals （yoy +4.3%, +3.8） stable
Operating Loss -24.8
（yoy -40.8）
V Electron Devices （yoy -23.4）, Others （yoy -8.2） decreased
（Gross operating profit decreased due to the drop of net sales despite a decrease in general administrative and
selling expenses）
Ordinary Loss -49.8
（yoy -59.3）
V Operating income decline
V Losses from the strong yen worsened by equity in net income of affiliates
Net Income -130.8
（yoy -125.5）
V Increased extraordinary loss
（Loss on revaluation of investments in securities, restructuring cost for Electron Devices）
V Increased corporate tax by reversal of deferred tax assets
40
© NEC Corporation 2009
3Q Results
Other Financial Data
（ Billions of yen）
07/12
08/12
YoY
Total Assets
3,684.4
3,396.1
-288.3
3,526.8
Net Assets
1,189.2
982.4
-206.8
1,185.5
Interest-bearing debt
1,009.6
1,058.9
49.3
800.8
Shareholders' Equity
997.3
816.5
-180.7
1,004.2
Equity ratio(%)
41
27.1%
24.0%
- 3.1pt
08/3
28.5%
D/E ratio
1.01
1.30
- 0.29pt
0.80
Net D/E ratio
0.60
0.81
- 0.21pt
0.42
© NEC Corporation 2009
3Q Results
Results by Segment
Net Sales
1,052.2
Operating Income/Loss
(Billions of yen)
16.0
-9.9%
yoy
-40.8
948.3
-24.8
16.0
-4.4
613.2
-3.6%
591.4
205.4
42
IT/NW Solutions
11.6
IT/NW Solutions
-2.4
Mobile/Personal
Solutions
-23.4
-20.2
Electron Devices
-8.2
-13.8
Others/Eliminations
-4.8
-5.6
-2.9%
199.4
212.0
2.4
3.3
-26.5%
21.5
155.9
1.7
FY08/3
FY09/3
Mobile/Personal
Solutions
Electron Devices
Others/Eliminations
FY08/3
© NEC Corporation 2009
FY09/3
3Q Results
Sales Change (Year on Year)
(Billions of yen)
FY08/3
1,052.2
Mobile/Personal Solutions -6.0 （-2.9%）
IT Service/SI
-2.3 （-1.3%）
Mobile Terminals
+3.8 （+4.3%）
IT Products
-4.1 （-3.2%）
Network Systems
-16.1 （-6.6%）
Social Infrastructure
+0.6 （+0.9%）
Personal Solutions
-9.8 （-8.3%）
Electron Devices
-56.1 （-26.5%）
FY09/3
IT/NW Solutions -21.9 （-3.6%）
948.3
Others
-19.9
43
© NEC Corporation 2009
3Q Results
Operating Income Change (Year on Year)
(Billions of yen)
FY08/3
16.0
IT Service/SI
approx. -2.0
Mobile/Personal Solutions -4.8
Network Systems
approx. +2.0
IT Products
approx. -3.0
Mobile Terminals approx. -2.0
Personal Solutions approx. -2.0
Social Infrastructure
approx. -1.0
FY09/3
-24.8
IT/NW Solutions -4.4
Electron Devices -23.4
Others -8.2
44
© NEC Corporation 2009
3Q Results
IT/NW Solutions Business
3Q
9 Months
Net Sales
613.2
IT Service/SI
177.6
127.0
1,887.4
-3.6%
591.4
Operating
16.0
-1.0%
1,867.7
YoY
Operating
IT Service/SI
Income/Loss
IT Products
（Billions of yen）
Net Sales
542.4
Income/Loss
175.3
51.1
-1.3%
122.9
11.6
IT Products
Approx.6
Network
Systems
384.4
550.7
+1.5%
394.4
Approx.24
45.0
+2.6%
-3.2%
Approx.18
Aoorox.8
Network
Systems
245.0
228.9
759.3
-6.6%
Approx.36
Approx.7
Social
Infrastructure
63.7
Approx.1
45
64.3
Approx.-3
Approx.4
-5.0%
Approx.9
+0.9%
FY08/3
721.1
Approx.23
Social
Infrastructure
FY09/3
201.3
201.5
Approx.-9
FY08/3
© NEC Corporation 2009
+0.1%
FY09/3
IT/NW Solutions Business
3Q Results
Sales 591.4 （-3.6%）
V IT service/SI:
3Q results are nearly flat yoy. The apparent restraint in IT investment by the financial and
communication sector were largely covered by sales in the government sector.
V IT product:
Trend of restraint in the business PC market, etc.
V Network Systems:
Sales decrease due to the rapid fall of enterprise investment for networks
Sales for telecom carriers are almost flat year on year
Operating Profit 11.6
（-4.4）
V IT service/SI, IT product:
Profits decline from decreasing sales
U Network Systems:
Slight improvement from mix of profitable products despite the stronger yen’s impact
* ( ) indicates year on year
46
© NEC Corporation 2009
3Q Results
Mobile/Personal Solutions Business
（Billions of yen）
3Q
9 Months
YoY
Sales
Sales
YoY
617.1
205.4
Mobile
Terminals
-2.9%
2.4
approx. 2
273.0
Operating
Income/Loss
91.8
Personal
Solutions
378.7
approx. 8
107.6
47
357.3
-5.7%
-8.3%
-2.4
approx. 3
apprix. -2
FY08/3
+14.5%
10.4
Operating
Income/Loss
Personal
Solutions
238.4
+4.3%
117.4
630.3
199.4
Mobile
Terminals
88.0
+2.1%
approx. -4
FY08/3
FY09/3
© NEC Corporation 2009
-3.6
FY09/3
Mobile/Personal Solutions Business
3Q Results
（Billions of yen）
Sales: 199.4 （-2.9%）
U Mobile Terminals:
Expanding market share from the introduction of new models
Shipped 1.3 million handsets in a shrinking market (slight increase year on year)
V Personal Solutions:
Sales decline due to stagnation of overseas market
Enterprise investment for PC falls rapidly in Japan
Operating Loss: -2.4 （-4.8）
V Mobile Terminals:
Fall in profits year on year due to increasing costs for launching a variety of models
Aim to improve development cost efficiency by utilizing master software
V Personal Solutions:
Loss from overseas PC business
* ( ) indicates year on year
48
© NEC Corporation 2009
3Q Results
Electron Device Business
3Q
9 Months
Net Sales
Net Sales
212.0
YoY
632.7
-26.5%
（Billions of yen）
-12.6%
552.7
155.9
Semiconductors
（NEC Electronics）
170.8
Semiconductors 521.8
（NEC Electronics）
Operating
Income/Loss
Electric
Components/
Others
41.2
FY08/3
Operating
Income/Loss
-25.5％
3.3
3.0
0.3
460.9
127.3
28.6
-20.2
-30.6%
Electric
Components/ 110.9
Others
-11.7%
4.7
4.9
-0.2
-19.8
91.8
-17.2%
- 16.2
- 15.0
- 4.0
- 4.8
FY09/3
FY08/3
FY09/3
*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. The difference that
arises as a result of the adjustment to Japan GAAP is included in Electronic Components and Others.
49
© NEC Corporation 2009
3Q Results
Electron Device Business
（Billions of yen）
Sales
155.9
（-26.5%）
V Semiconductors :
Business deterioration causes MCU, particularly with declining individual semiconductor
revenues.
V Electric Components/Others :
Electric components decrease due to the rapidly shrinking market.
LCD decreases due to falling demand in mid-large size industry markets.
Operating Loss -20.2
（-23.4）
V Semiconductors :
Decline due to falling sales
V Electric Components/Others :
Electric components fall into the red. Cost cutting unable to overcome decreasing sales.
LCD impacted by declining sales and currency exchange.
* ( ) indicates year on year
50
© NEC Corporation 2009
3Q Results
Ref. Quarterly Performance
(Electron Device Business)
Sales
214.7
205.9
(Billions of yen)
212.0
198.2
197.4
199.4
155.9
Semiconductors
170.8
177.4
（NEC Electronics） 173.6
165.9
167.3
166.3
127.3
Operating
Income/Loss
Electric
Components/
Others
32.3
-4.4
37.3
5.8
3.3
4.1
.
17
41.2
- 2.2
- 2.2
3.0
0.3
2.7
32.4
0.2
2.5
-0.2
31.1
1.7
- 1.5
32.1
0.6
1.1
-0. 5
28.6
-20.2
- 16.2
- 4.0
1Q
2Q
3Q
4Q
FY08/3
1Q
2Q
3Q
FY09/3
*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. The difference that
arises as a result of the adjustment to Japan GAAP is included in Electronic Components and Others.
51
© NEC Corporation 2009