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 |  Wall Street Journal -
Nov-06-2009NEC to Raise $1.48 Billion(topic overview)
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The capital raising, tipped by sources on Thursday, sent the firm's shares up 10.5 percent. It is NEC's first new share issue in six years. NEC, which cut its full-year operating profit outlook by 40 percent last week, is hurrying to shore up its capital, which was weakened by losses at semiconductor unit NEC Electronics ( 6723.T ) and sluggish sales of network systems. Once the world's largest chipmaker, NEC faces large restructuring costs as it hurries to cut 290 billion yen in fixed costs in the year to March, which some analysts say is inadequate, and prepare for its chip unit merger with Renesas Technology ( 6501.T ) ( 6503.T ). [1] NEC spokesman Makoto Miyakawa declined to comment. NEC, which cut its full-year operating profit outlook by 40 percent last week, is hurrying to shore up a capital base that has been weakened by losses at semiconductor unit NEC Electronics ( 6723.T ) and sluggish sales of its network systems. NEC reported a net loss of about $3 billion in the past financial year ended in March, driving its shareholders' equity ratio to just under 21 percent and roughly half that of peers Sharp Corp ( 6753.T ) and Panasonic Corp ( 6752.T ).[2]
"But that kind of money isn't possible unless Japanese electronics firms band together." NEC reported a net loss of about $3 billion in the past year to March, driving its shareholder equity ratio to just under 21 percent -- roughly half that of peers Sharp Corp (6753.T: Quote, Profile, Research ) and Panasonic Corp (6752.T: Quote, Profile, Research ). The company said it would issue 575 million new shares, boosting its shares outstanding by 26 percent.[3]
Company announcement as early as Friday-sources (Adds details) By Emi Emoto and Taro Fuse TOKYO, Nov 5 (Reuters) - NEC Corp ( 6701.T ), Japan's largest PC maker, plans to raise up to 150 billion yen ($1.7 billion) in a share offering to shore up its capital and invest in growth businesses, four sources familiar with the matter said. The company will announce the share issue, its first in 6 years, as early as Friday, the sources said.[2] NEC Corp surged 9.3 percent to 271 yen despite Japan's biggest PC maker saying it plans to raise up to $1.5 billion in shares. Sources had earlier told Reuters the offer was to shore up its capital and invest in growth businesses.[4]
TOKYO (Reuters) - NEC Corp (6701.T: Quote, Profile, Research ), Japan's biggest PC maker, plans to sell up to 133.9 billion yen ($1.5 billion) to restore its battered capital base as it scrambles to cut costs and shift focus to cloud computing and lithium-ion batteries.[3]
TOKYO -- NEC Corp. said it will raise as much as 134 billion yen ($1.48 billion) from equity financing by issuing new shares making up more than a quarter of its shares outstanding.[5] In one example, T&D Holdings Inc dropped 11 percent to 2,115 yen, becoming the biggest drag on the Nikkei 225, after the insurance company gave notice on Thursday that it may raise up to 120 billion yen ($1.3 billion) to repay debt by selling new shares. The benchmark Nikkei rose 84.81 points to 9,802.25 on Friday after marking a one-month closing low on Thursday, and it looked headed for its second straight week of falls.[4]
Issuing 150 billion yen worth of stock at Thursday's closing price of 248 yen would boost the number of NEC's shares outstanding by 30 percent. NEC, which competes with Fujitsu Ltd ( 6702.T ) in telecom and IT services equipment, would use some of the funds raised to invest more in growth areas such as in lithium-ion batteries for next-generation cars and in cloud computing, the sources said.[2] The company, which has a battery joint venture with Nissan Motor Co ( 7201.T ), said it would also use some of the money in lithium-ion battery production. Lithium-ion batteries for hybrid and electric cars requires long-term investment, and to secure automakers' business, NEC needs to demonstrate it has a strong balance sheet, said one source who asked not to be named as he was not authorized to talk to the media. Before the news sent its stock up, shares of NEC hit an eight-month low the previous day, having shed 60 percent since a peak in June.[1]
TOKYO, Nov 6 (Reuters) - Japan's Nikkei stock average rose 0.9 percent on Friday as exporters such as Canon Inc climbed after good U.S. job news renewed hopes about the pace of economic recovery, with tech shares up after gains by their U.S. peers.[4]
The market's gains were limited by wariness ahead of U.S. jobs data due on Friday as well as by longer-term uncertainty about the Japanese market, which some analysts said reflected concern about more potential corporate fundraising. "Japanese shares aren't rising compared to the rest of Asia because there aren't a lot of merits for investors, they aren't going to make money due to fundraising," said Tomomi Yamashita, a fund manager at Shinkin Asset Management. "As long as this funding risk is there, nobody's going to want to buy even with good earnings results. They'll just buy companies that are fiscally sound."[4] NEC will be joining a rush of firms tapping resurgent equity markets for funds. Japanese companies have sold $38 billion worth of shares so far this year, an almost five-fold increase from $8.7 billion a year earlier, according to Thomson Reuters data.[2]
Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities said that NEC's plans to raise funds had been factored in since news of a potential share issue first broke in July. It was the biggest percentage gainer on the benchmark Nikkei average.N225.[1] Market analysts said that since the news that NEC might raise funds had been out in the market for several months and sharply depressed the share price, the actual announcement was factored in and a wave of short-covering emerged.[4]
TOKYO (Dow Jones)--NEC Corp. (6701.TO) said Friday it will raise up to Y134 billion in proceeds from equity financing by issuing new shares making up more than a quarter of its.[6]
"NEC needs to raise 400 billion yen to 500 billion yen to truly put it on a growth path," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.[1] Pioneer Corp advanced 8 percent to 244 yen after UBS upgraded the consumer electronics company to "neutral" from "sell" after it said on Thursday that it needs to raise less funds than previously planned.[4]
Canon and other exporters gained after Wall Street jumped on the jobs data, with Canon gaining 3 percent to 4,820 yen and Honda Motor Co up 1.3 percent to 2,820 yen.[4]
Figures showed U.S. non-farm productivity rose more than expected in the third quarter, while a separate report showed fewer U.S. workers filed new jobless insurance claims than forecast last week, hitting a 10-month low. The U.S. government is scheduled to release its key monthly jobs report on Friday, with economists polled by Reuters forecasting a loss of 175,000 jobs in October, sharply below the 263,000jobs cut in the previous month.[4] The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. The content on this site, including news, quotes, data and other information, is provided by Thomson Reuters and its third party content providers for your personal information only, and neither Thomson Reuters nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.[7] Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms.[1] The broader Topix rose 0.1 percent to 875.38. Both underperformed the rest of Asia, with the MSCI Index of Asia-Pacific stocks outside Japan rising 1.6 percent as of 0428 GMT. Some analysts said that with earnings mostly over, Japanese stock markets are searching for new factors.[4]
SOURCES
1. NEC plans $1.5 billion share sale after losses | Deals | Reuters
2. RPT-UPDATE 1-NEC to raise $1.7 bln in share offer-sources | Industries | Technology, Media & Telecommunications | Reuters
3. NEC plans $1.5 billion share sale after losses | Deals | Reuters
4. Nikkei up but top-heavy, exporters and NEC gain
5. NEC to Raise $1.48 Billion - WSJ.com
6. NEC: Raise Up To Y134B In Proceeds From Share Offering - WSJ.com
7. Nikkei gains but investors still wary, NEC surges - Forbes.com
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