Perryic victory

19 December 2007 By John Christy

Japan can be a frustrating place for investors, as Perry Capital’s struggle with NEC shows. But Perry hasn’t failed. It got the chipmaker to accelerate its costcutting efforts. This small success offers other investors a faint glimmer of hope.

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NEC Electronics Corp. is planning to cut costs, reduce investment spending and unveil additional plans to boost operating profit in February. In an interview with Bloomberg News, the company's chief executive Toshio Nakajima said NEC will cut its mobilephone research budget in half and freeze new investments in factories.

Nakajima aims to boost the chipmaker's operating margin –which is currently flat – to 5% in the next fiscal year, ending in March 2009. The costcutting plans are in part due to pressure from New Yorkbased Perry Capital LLC, a hedge fund manager. "We agree with Perry's vision when it comes to improving profitability," Nakajima said.

Perry offered to buy a 25% stake in NEC Electronics in July for $1.4bn, from its parent company, NEC Corp. Perry is the thirdlargest shareholder in NEC Electronics, with a 6% stake.

Context News

Perry offered to buy a 25% stake in NEC Electronics in July for $1.4bn, from its parent company, NEC Corp. Perry is the thirdlargest shareholder in NEC Electronics, with a 6% stake.

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