News Briefs - Software:

NEC Group To Restructure Its Software/Services Structure

NEC Corporation, NEC Soft, Ltd., and NEC System Technologies, Ltd. announced that the three companies will restructure and strengthen the structure of the NEC Group's entire software/service business, strengthening its SI competence and software development competence, toward the acceleration of its growth strategy.

Toward this aim, NEC resolved at the meeting of the Board of Directors today to initiate tender offers for the shares of NEC Soft, Ltd. and NEC System Technologies, Ltd., in order to make both companies its wholly-owned subsidiaries. In addition, both NEC Soft, Ltd. and NEC System Technologies, Ltd. resolved their agreement to the tender offer at their respective board meetings today.

Targeting June of next year, NEC will make both NEC Soft, Ltd. and NEC System Technologies, Ltd. its wholly-owned subsidiaries and position each company as one of NEC's business units, building a business structure in line with NEC's business strategy.

By merging the software technology capability, project management capability, and service provision capability etc. cultivated by all three companies, and through creating a business structure which can demonstrate the SI capability and software development capability of the NEC Group to its maximum extent, NEC can simultaneously offer high-value added SI/services and quickly and precisely respond to a variety of highly sophisticated customer needs. Furthermore, to strengthen the software capability of the entire NEC Group, NEC will expand its software development management capability and know-how etc., which was cultivated in the IT domain, to the network, semiconductor, and embedded software business areas etc.

Outline of the strengthening and restructuring of the entire NEC Group's software/services business structure:

1. Strengthening of the SI/Services Business

NEC will utilize group-wide the project management competence, which was cultivated by NEC Soft, Ltd., and strengthen its responsiveness to regional markets and mid-sized enterprises, as well as its responsiveness to large- scale system construction projects and integrated IT/network system construction.

For this purpose, targeting June of 2005, 700 software engineers will be transferred from NEC Soft, Ltd. to NEC to strengthen its SI/services business base. In addition, along with positioning NEC Soft, Ltd. as one of NEC's business units, by positioning all of NEC's software businesses in Hokkaido, Aomori, Tohoku, Hokuriku, Chubu, and Kyushu under this business unit, sharing of SI construction methods and tools is enabled, strengthening an SI support structure capable of meeting a variety of highly sophisticated customers' needs.

Furthermore, targeting the second half of 2005, NEC will reorganize the SI/services business including NEC System Technologies, Ltd. assigning roles and responsibility within NEC, and promote the expansion of SI/services business for mid-sized enterprises and regional markets.

2. Enhancement of Software Development Competencies

NEC will enhance its software development capability by expanding NEC System Technologies' software development and development management capabilities to NEC's other business areas such as networking, semiconductors and embedded software, and utilize these competencies group-wide.

In order to enhance NEC's core software development capability, a part of the core software development team will be transferred to NEC targeted at June 2005. NEC System Technologies, Ltd. will be repositioned as one of NEC's business units. In addition, the positioning of NEC Communication Systems, Ltd. (HQ: Minato Ku, Tokyo, President: Naotake Takatsukasa) under this new business unit will aid acceleration of IT/network integration in the software development business area.

Furthermore, NEC will enhance the creation of new software technology and new software business, such as open base software like Linux and Java etc. and embedded software for mobile phones, by merging software development resources/competencies, which are currently distributed among its Group companies, under NEC System Technologies, Ltd. and NEC Communication Systems, Ltd. Software development responsibilities will be clearly assigned according to business area.

Recently, the corporate environment is changing rapidly due to tough business competition, globalization of the supply chain, and complex needs from the market place. In order to survive tough competition under this business environment, the number of companies promoting strategic IT investment and telecommunication carriers focusing on development of new service infrastructure is increasing. Therefore, SI/service demands in the market place are rapidly expanding. At the same time, there is a drastic increase in complex and highly sophisticated customer needs.

Due to the advancement of a ubiquitous networked society, the importance of embedded software and application software for semiconductors, not only in the IT area, but also for mobile phones, digital home electronics, and automobile equipment, is increasing.

Since 2000, when NEC Soft, Ltd. was listed on the Tokyo Stock Exchange ("TSE"), it has focused on strengthening its project management and system construction competencies, and since last year, when NEC System Technologies, Ltd. was listed on the TSE it has focused on the enhancement of its IT platform software development capabilities and advanced software technologies. The listing on the TSE has enabled enhancement in their respective management. From now on, amid a rapidly changing business environment in the SI/services and software business domains, NEC, NEC Soft, Ltd., and NEC System Technologies, Ltd. that have enhanced NEC's business execution competence will work in close cooperation. In addition to this, the restructuring of Group software companies including NEC Communication Systems, Ltd. will strengthen NEC Group management toward enhanced growth and the development of new software business.

About NEC Corporation

NEC Corporation is one of the world's leading providers of Internet, broadband network and enterprise business solutions dedicated to meeting the specialized needs of its diverse and global base of customers. Ranked as one of the world's top patent-producing companies, NEC delivers tailored solutions in the key fields of computer, networking and electron devices, by integrating its technical strengths in IT and Networks, and by providing advanced semiconductor solutions through NEC Electronics Corporation. The NEC Group employs more than 140,000 people worldwide and had net sales of 4,906 billion yen (approx. $47 billion) in the fiscal year ended March 2004. For additional information, please visit the NEC home page at: http://www.nec.com.