NEC to invest US $ 1.2 b in IT business

Japan's NEC Corp said on Wednesday it would invest 100 billion yen ($1.2 billion) in three years in its IT services business to expand its global operations and cloud-computing services.

NEC, Japan's No.2 IT services vendor after Fujitsu Ltd, has lagged behind global rivals like IBM and HP in its recovery at a time when worldwide IT spending is gradually coming back. NEC's IT services business Head Takuji Tomiyama said the explosive growth of cloud-computing services - which enable users to access software over the Internet - is offering NEC a chance to snatch clients from rivals and win new customers.

"We realise we have lost some growth opportunities in the services and global fields in the past few years," Tomiyama told a briefing. "Now that we are in the cloud-computing era, we believe we have less barriers to make inroads into rivals' turf." NEC aims to expand its IT service sales by 27 percent to 1.1 trillion yen by March 2013. It hopes that 15 percent of such sales will be generated overseas in 2012/13, against less than 10 percent last business year.

It aims to boost its operating profit margin in the IT business to 8 percent in three years from 6 percent last year.

Tomiyama said the 100 billion yen investment would include possible acquisitions, the costs to develop software applications and spending on data centre facilities. NEC shares were flat at 229 yen. The benchmark Nikkei average was up 0.3 percent.

Tokyo, Reuters