NEC’s quarterly loss swells as it abandons smartphones

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NEC said Wednesday its net loss swelled in the three months to June, as the Japanese information technology giant announced plans to exit its once-dominant smartphone business.

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The company lost 21.5 billion yen in the three months to June, compared to 17.9 billion yen in the same quarter a year earlier. Sales rose 1.4% to 640.1 billion yen.

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The firm attributed its mounting losses to a slump in its telecom system businesses, which includes network infrastructure and another unit that supplies computer servers.

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NEC — a one-time powerhouse in the sector — also said it would exit the smartphone business, ending the development, production and sales of the mobile devices.

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“We were late to enter the smartphone market, and we were unable to develop attractive products. That’s what it comes down to,” NEC chief financial officer Isamu Kawashima told a press conference, according to Dow Jones Newswires.

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NEC had merged its mobile phone handset operations with those of Casio Computer and Hitachi to fight off rising competition. But the subsidiary struggled to succeed in a market increasingly dominated by Apple and South Korean giant Samsung.

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The Japanese firm has seen its domestic smartphone market share dive from top spot with around 27% to just 5% now, according to Japanese media.

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Also Wednesday, NEC left its full-year forecast unchanged, saying it was still gauging the impact on its earnings from the decision to stop making smartphones.

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The firm expects to swing back to a net profit of 20 billion yen for the year to March 2014 on sales of 3 trillion yen.

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