NEC Corp. said investments in its energy business will reach $1.1 billion over the next eight years, as Japan’s biggest maker of personal computers aims to reinvent itself after a decade-long slide in sales.
Spending on factories that make parts for batteries supplied to Nissan Motor Co. and smart-grid equipment will rise to ¥100 billion by the year ending in March 2018, including ¥50 billion this year announced earlier, President Nobuhiro Endo said in an interview Wednesday at the company’s Tokyo headquarters.
Endo, a 56 year-old with a doctorate in electrical engineering, last month took over the top job at NEC, whose revenue has fallen by ¥2 trillion from its peak nine years ago as it scaled back money-losing display and overseas PC units. After depending for decades on the capital spending budgets of Japan’s phone companies for its sales, the company is now betting its future on energy and cloud computing businesses.
Cost cuts of ¥321 billion helped NEC eke out net income of ¥11 billion in the year that ended March 31, even as sales fell 15 percent to ¥3.6 trillion, the company said last week. It lost ¥297 billion in the prior 12 months, forcing the company to cut 20,000 jobs and rethink its strategy.
NEC in February announced a midterm plan that aimed to increase the firm’s net income to ¥100 billion in the year ending in March 2013 on sales of ¥4 trillion. Cloud computing systems will account for a quarter of revenue in the period and the proportion of NEC’s overseas sales will grow to 25 percent from 17 percent now, it said.
Global spending on cloud computing, which lets clients store and access data on an external server to avoid the cost of maintaining their own, will more than double to $44.2 billion in the next three years, according to Framingham, Mass.-based researcher IDC.
NEC will add a battery-electrode production line at one of its domestic factories in the last three months of this business year, Endo said. The company said in March it would invest more than ¥50 billion in the current fiscal year to expand production of parts used in lithium-ion batteries supplied to Nissan.
The global market for lithium-ion batteries used in electric cars will grow to ¥1.7 trillion in 2020 from “almost nothing” in 2009, Daiwa Securities Group Inc. wrote in a March report.
The company forecasts annual sales from its energy business will reach ¥100 billion in the year ending in March 2013; revenue will triple in the five years after that, as the company expands its list of battery customers.
NEC will also look to buoy sales by introducing a hand-held tablet similar to Apple Inc.’s iPad in October, Endo said.
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