NEC plans $1.5 billion share sale after losses

By Mayumi Negishi

TOKYO (Reuters) - NEC Corp (6701.T), Japan's biggest PC maker, plans to sell up to 133.9 billion yen ($1.5 billion) of shares to restore its battered capital base as it scrambles to cut costs and shift focus to 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 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).

"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.

"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) and Panasonic Corp (6752.T).

The company said it would issue 575 million new shares, boosting its shares outstanding by 26 percent.