NEC Corp.'s net loss came to 24.6 billion yen (205 million dollars) compared with a 312.0 billion yen loss previously.

Its pre-tax profit of 61.5 billion yen reversed a 461.2 billion yen loss the year before, while revenue shrank 8.0 percent to 4.70 trillion yen.

"Profitability in the information technology solutions business improved on better personal computer sales after restructuring our operations," senior managing director Shigeo Matsumoto told a news conference.

"Software services contributed to half of the increase in profits," he said.

Sales from its electronic devices business, including chips for mobile phones, rose 11 percent to 936.7 billion yen, but IT services sales fell.

Revenue from the firm's network solutions segment, which includes networking equipment sales, dropped 20 percent.

Profits in NEC's IT solutions business rose by nearly a third to 105.8 billion yen, while network solutions profits sank a third to 34.2 billion yen.

"The network solutions business profits declined due to a substantial drop in revenue as mobile carriers cut back on spending," Matsumoto said.

NEC said in a statement its net loss was caused by losses on investments in affiliated semiconductor companies and the writedown of deferred income tax assets due to a new law.

The company said in early April its investments would be written down by 20 billion yen.

Analysts said the loss was largely due to NEC's 50 percent stake in Elpida Memory Inc., a joint venture with Hitachi started last year and one of the world's leading multipurpose dynamic random access memory (DRAM) chipmakers.

"The new management at Elpida said they hoped to see profits on a quarterly basis after a year, so it was clear it was losing money," said ING Securities analyst Yoshihiro Shimada.

Shimada said while NEC's restructuring was paying off, deflation continued to cause worries for the future.

"The price of hi-tech services are falling across the industry. It can't be helped if all companies in the sector see their revenues in the segment fall," he said.

For the year to March 2004, NEC predicted it would return to the black with a net profit of 30 billion yen and pre-tax profit of 120 billion yen on sales of 4.8 trillion yen.

NEC's Matsumoto said higher sales would contribute 50 billion yen to profits this financial year, with cost cutting contributing 30 billion yen and 360 billion yen coming from lower materials costs.

"The benefits can more than offset lower sale prices of our electronics products," he said.

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