By Zeba Fatima

Japanese electronics giant NEC Corp. has revealed it will cut about 10,000 jobs this year as the company expects a net loss of 100 billion yen ($1.3 billion) for the fiscal year ending on March 31.

The huge loss is much higher than the 15 billion yen ($193 million) profit it previously forecast. The company said it would cut about 7,000 jobs in Japan and 3,000 jobs overseas following a review of manufacturing operations later this year. The job cuts represent about 8.6 % of its global workforce.

NEC President Nobuhiro Endo said the company will also take a 40 billion yen ($516 million) charge for workforce elimination costs and to restructure its business. NEC further announced it will not pay a year-end dividend, according to a presentation the company released.

“The job cuts announced today are bigger than expected,” said Mizuho Investors Securities Co analyst, Yuichi Ishida.

“This will probably help the company reduce expenses, and we’ll probably see some improvements immediately from next fiscal year,” Ishida told Bloomberg.

Thailand floods impact production

NEC's poor performance is mostly the result of a weak demand for its smartphones amid the popularity of Apple's iPhone in Japan. Other reasons include the strong yen, global reductions in investment spending, and the impact of last year's floods in Thailand.

The floods caused significant damage at NEC's sites in Thailand and most of the work remains suspended, although production at one site is expected to resume in mid-March. NEC said the floods caused a decrease by 22 billion yen ($284 million) in sales and 9 billion yen ($116 million) in operating income.

The Tokyo-based company, which provides technology services and makes computers and other electronic devices, also cut about 20,000 jobs in early 2009 after posting a net loss of 130 billion yen ($1.46 billion).