National Electronics Corp.

National Electronics Corp. (Abridged Mr. Talbot is CEO of National Electronics Corp. (NEC) and has held that position since 2002. Mr. Wigner has never felt comfortable with having debt in the company's capital structure. During the 15 years of his tenure as CEO, NEC has experienced impressive growth in sales, earnings and dividends. The date is now February 2017. At the end of 2016, NEC had essentially no debt on its balance sheet and had cash equal to 25% of its net worth. Mr. is expected to retire in the near future and Wall Street analysts have the view that NEC will likely adjust its capital structure to include more debt after his departure. The Companye NEC's 2016 sales of nearly $4 billion were generated by over 40 brands in four lines of business: entertainment electronics (such as handheld games), cell phones, internal electronics (such as electronics for automobiles), and PDAs. NEC's largest and most profitable business PDAs has a major market share against well-known competitors. NEC's success has been built on marketing expertise. Whether the product is a game console or a new cell phone, NEC makes a practice of "out-marketing" the competition. NEC has a distinctive corporate culture that reflects the personal traits of its CEO. This culture has several features. The company is known for its tight financial controls and frugality. Any expenditure greater than $100,000 must be personally approved by Mr. even if it has been previously allocated in the corporate budget. NEC's culture can also be described as highly risk averse. NEC consistently avoids much of the risk of new-product development in the volatile electronics industry. Historically, most of its new products either were acquired or licensed after their development by other firms or they were copies of new products introduced by competitors. Further, many of NEC's new products are modest extensions of existing products. NEC thus avoids taking chances on R&D and new- product introductions and uses its marketing skills to promote purchased products and product extensions. When innovative products are introduced by competitors, NEC responds with similar products and relies on its marketing expertise to catch up with the competition.e