Nidec Corporation (Nidec) has reported net sales of JPY506.4 billion for the nine months of fiscal 2009, compared with the net sales of JPY549.2 billion in the year-ago period. It has also reported a net income of JPY23.1 billion, or JPY156 per diluted share for the nine months of fiscal 2009, compared with the net income of JPY34.3 billion, or JPY230.3 per diluted share in the year-ago period.

Qualitative Information Regarding Consolidated Business Results:

Overview of the nine months ended December 31, 2008 (Fiscal Year Ending March 31, 2009):

Business conditions throughout the third quarter of fiscal 2008 underwent a dramatic change compared with the six-month period ended September 30, 2008. This was mainly attributable to a worldwide recession that reflected growing financial unrest, triggered by a variety of factors including the sub-prime loan crisis in the US. Under these circumstances, NIDEC experienced a sudden downturn across the vast majority of its businesses, resulting in a drop in sales from the middle of November 2008. Confronted with the unprecedented predicament of month-to-month deterioration in sales by as much as 50%, NIDEC was forced to act quickly to deal with the sudden change. In this context, the company adopted a set of measures, taking steps to reduce fixed expenses, substantially cut operating costs and streamline inventories. Combating the 50% decline in sales, NIDEC worked tirelessly to establish a framework that would prevent the company from falling into a loss position for the year. Despite these endeavors, NIDEC was unable to prevent deterioration in its business results. This was attributable to the decrease in sales associated with the sudden and decrease in production. As a result, net sales, operating income and net income for the nine months ended December 31, 2008 decreased 7.8%, 11.7% and 32.8% compared to the previous nine months ended December 31, 2007, respectively.

Operating results:

Operating results for the nine months ended December 31, 2008:

Our consolidated net sales and operating income for the nine months ended December 31, 2008 (this period) decreased about JPY42,800 million, or 7.8%, to JPY506,406 million and about JPY6,700 million, or 11.7%, to JPY50,816 million compared to the previous nine months ended December 31, 2007 (the previous period), respectively. Net sales of small precision motors, machinery, and electronic and optical components decreased. Operating income of the three product segments and mid-size motors also decreased.

Our income from continuing operations before income taxes and net income decreased about JPY12,800 million, or 23.7%, to JPY41,303 million and JPY11,200 million, 32.8%, to JPY23,063 million compared to the previous period, respectively. This decrease was due in part to foreign exchange loss which increased about by JPY7,500 million from JPY2,600 million for the previous period to JPY10,200 million for this period.

Net sales by product segments:

Net sales of small precision motors decreased about JPY36,800 million, or 12.4%, to JPY258,576 million for this period. Sales of spindle motors for hard disk drives (HDD) decreased about JPY23,800 million, or 14%, while unit shipment of the spindle motors slightly increased 1%. This decrease was due to the about 12% yen appreciation against the US dollar. For the three months ended December 31, 2008, sales decreased about 40% compared to the three months ended December 31, 2007. The yen-based and the US dollar-based average unit price of the motors for this period decreased about 15% and 2% compared to the previous period, respectively. Sales of spindle motors for 3.5, 2.5 and 1.8-inch HDDs decreased, especially the sales of the motors for 3.5-inch HDDs decreased 23%, but unit shipments of the motors for 2.5-inch HDDs increased 24% compared to the previous period. Sales of DC motors also decreased about 8,500 million, or 12% compared to the previous period. Sales of brushless DC motors by Nidec Corporation and its direct-line subsidiaries decreased about JPY6,600 million, or 15.5%, while unit shipments of the motors decreased about only 7%. Sales of fan motors also decreased about 5,400 million, or 15%. Sales of fan motors by Nidec Corporation and its direct subsidiaries decreased about 16%, but the quantity of unit shipments of the motors increased 5%.

Net sales of mid-size motors decreased about JPY7,400 million, or 10.5%, to JPY63,500 million for this period. Sales of motors for automobiles showed about JPY5,900 million, or 16.5%, decrease compared to the previous period. Sales of motors for home appliances and industrial use had less than 10% decrease.

Net sales of machinery increased about JPY7,200 million, or 13.5%, to JPY60,321 million for this period. This growth was due to sales increase of LCD-panel-substrate handling robots of Nidec Sankyo, Nidec-Read and Nidec Copal. On the other hand, sales of Nidec-Kyori, Nidec Tosok and Nidec-Shimpo decreased compared to the previous period.

Net sales of electronic and optical components decreased about JPY8,800 million, or 8 %, to JPY101,298 million for this period. Sales of shutters for digital cameras and mobile phones and plastic lens unit of Nidec Copal and electric circuit parts of Nidec Copal Electronics decreased more than 10% compared the previous period. NIDEC discontinued optical pickup unit business, which was one of Nidec Sankyo’s businesses, as of December 31, 2008. The result of optical pickup unit business for the nine months ended December 31, 2008 was recorded as net income from discontinued operations in accordance with Statement of Financial Accounting Standards No.144, “Accounting for the impairment or disposal of Long-Lived Assets.” Net sales of the discontinued operations for this period and previous period were JPY7,698 million and JPY9,767 million, respectively.

Net sales of other products increased about JPY2,900 million, or 15%, to JPY22,711 million for this period. Sales of automotive parts of Nidec Tosok had double-digit percentage growth due to the increased automotive parts demand for compact car and new customer’s demand.

Our income by products segment for the nine months ended December 31, 2008:

Operating income decreased JPY6,721 million, or 11.7%, to JPY50,816 million for this period compared to the previous period. Operating income of small precision, mid-size motors and electronic and optical components decreased, while operating income of other products increased. Ratio of operating income to net sales for this period could remain more than 10%, even though the ratio for three months ended December 31, 2008 decreased to 7.1%.

Details of each business segment are as follows:

Operating income of small precision motors decreased about JPY3,900 million, or 10%, to JPY33,884 million for this period. Operating income ratio for this period improved to 13%, compared to the ratio for the previous period despite the decrease of income for the three months ended December 31, 2008 (this third quarter). Operating income ratio for this third quarter was 10.8%, which is low compared to the any other recent period.

Operating income of mid-size motors decreased about JPY1,400 million, to JPY357 million for this period. This is primarily due to the JPY800 million of operating losses in this third quarter, which was primarily caused by a decline of motors for automobiles.

Operating income of machinery decreased about JPY400 million to JPY8,191 million for this period. LCD-panel-substrate handling robots sales by Nidec Sankyo increased, but were offset by the lower sales of Nidec-Kyori, Nidec-Shimpo and Nidec Tosok.

Operating income of electronic and optical components decreased about JPY900 million, to JPY9,385 million for this period. This came primarily from decrease in sales of Nidec Copal and Nidec Copal Electronics.

Operating income of other products increased about JPY200 million to JPY1,766 million for this period. This increase was primarily due to sales increase in Nidec Tosok’s automotive parts.