More pain for Japan's tech firms

The market for big-ticket items like computers is slowing

Japan's electronics giants have unveiled another swathe of bad news, as the effects of the global economic slowdown start to bite.

Electronics firm NEC warned that the aftershock of the 11 September attacks on the US means it will post a huge loss this year.

The company admitted it was already suffering, along with the vast majority of the electronics market, from the global slowdown which has hit the hi-tech world since the beginning of the year.

But in the wake of 11 September, recovery is much further off, NEC said.

"Hopes have been defeated for a quick recovery in the American economy that has been the force for growth in the global economy," the company said in a statement.

Common problems

Its difficulties are highlighted by announcements from consumer giant Sony and number two telecoms company KDDI that they, too, expect a rough ride in the coming months.

Sony said that sliding sales in the US, coupled with restructuring charges, meant that operating profits for the full year will be about 120bn yen (£680m; $1bn), less than half the 250bn it previously foresaw.

The new figures incorporate the likely effects of the US attacks, the company said.

KDDI followed suit, warning that sales will be 2.93 trillion yen - down from 3.01 trillion - and net profits will drop to 35bn yen from previous predictions of 64bn.

KDDI's problems, though, are more the product of Japan's weak domestic economy.

Its wireless unit, "au", is seeing revenues slow as dominant carrier NTT DoCoMo rolls out more advanced third-generation and fast data services.

Heavy loss

As for NEC, as late as April this year the company was still reckoning on a net profit of 65bn yen for the full year.

Now, though, the company says it is expecting a loss of 150bn yen for the year ending in March.

Prices of computer chips are continuing to slide, and there is little sign of a turnaround any time soon.

NEC has already said it will cut 4,000 jobs by March. Of these, 1,800 or 1.2% of its global workforce come from its own staff, while 2,200 will be drawn from subcontractors.