Standard & Poor's Rating Services today responded to a troubling earnings report from Japanese telecom equipment and smartphone manufacturer NEC, lowering the company's long-term and short-term corporate credit rating to BBB- and A-3, respectively.
"Likelihood of an early recovery in NEC's financial soundness has receded, due to a slowdown in profit improvements as well as costly structural reforms," S&P stated in a press release.
NEC on Friday reported a $1.3 billion loss for the fiscal year ending in March on poor sales in its mobile phone and carrier network business, as well as the impact of flooding in Thailand on its platform business.
The company attributes lagging smartphone sales on the popularity of Apple's iPhone in Japan.
NEC also announced late last week that it would cut 10,000 jobs, or 8.6 percent of its total workforce. According to a statement, the company will incur a $521.24 million "extraordinary charge" for restructuring. Most of the cuts are expected to come from NEC's mobile phone segment.