NEC blamed its poor performance on weak demand for its smartphones amid the popularity of Apple's iPhone in Japan, as well as on inroads by foreign rivals into the domestic IT infrastructure business and difficulty in expanding overseas.

It warned it would post a net loss of 100 billion yen ($1.3 billion) for the year to March 31, much bigger than its previous forecast of a 15 billion yen profit and a similar average estimate from eight analysts polled by Thomson Reuters I/B/E/S.

For the three months ended December 31 it booked a net loss of 87 billion yen.

It also slashed its projection for annual mobile phone sales by nearly a quarter to 5 million phones and most of the job cuts will be in its mobile phone business.

Headcount will be reduced by the end of September and around 7,000 layoffs will be in Japan, Nobuhiro Endo said at a news conference in Tokyo.

Endo said NEC will miss a target to raise overall sales to 4 trillion yen next business year but would still try to reach a goal of boosting its operating profit margin to 5 percent.

The restructuring would result in a charge of 40 billion yen this financial year but would add 40 billion yen to income in the next financial year, Endo said.