NEC Plans $1.5 Billion Share Sale after Losses

NEC Corp, Japan's biggest PC maker, plans to sell up to 133.9 billion yen ($1.5 billion) in new shares, restoring its battered capital base and to invest in growth areas such as cloud computing and lithium-ion batteries.

The capital raising, tipped by sources on Thursday, sent the firm's shares up 10.5 percent. It is the firm'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 and sluggish sales of network systems.    

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 and Panasonic Corp.

The company said it would issue 575 million new shares, boosting its shares outstanding by 28 percent.

NEC, which competes with Fujitsu in telecoms and IT equipment, said it would use some of the funds raised to develop the next generation of communication networks and cloud computing.

The company, which has a battery joint venture with Nissan Motor, said it would also use some of the money in lithium-ion battery production.

Shares of NEC jumped 26 yen to 274 yen before easing back to 268 yen, a gain of 8 percent. It was the biggest percentage gainer on the benchmark Nikkei average.