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The following is excerpted from IRG's weekly stock report:

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Hardware

Sumco Corp. (OTCPK:SUMCF) slashed its annual outlook sharply, becoming one of the latest chip-related companies to be affected by a slowing economy. Cooling consumer sentiment ahead of the holiday shopping season has prompted makers of PCs, flat TVs and mobile phones to keep their inventories light, trimming demand for microchips. Sumco said its business environment was rapidly deteriorating as the financial market turmoil hits the real economy. Silicon wafers are used to make microchips. Sumco now expects its operating profit to total 65 billion yen (US$637 million) in the year ending January 31, 2009. Sumco also lowered its net profit forecast by 45 percent to 32 billion yen (US$340 million) for the current business year.

NEC Corp cut its annual operating profit forecast by 29 percent, hit by sluggish mobile phone sales and rapidly deteriorating demand for microchips. A drop in business investments by domestic mobile phone operators also hurt sales of its wireless base stations and other cellphone infrastructure-related equipment. A revision had been expected after its semiconductor unit NEC Electronics Corp. slashed its full-year operating profit forecast by 90 percent, citing inventory adjustments at customers and slower orders. NEC now expects operating profit to come in at 120 billion yen (US$1.2 billion) in the year to March, down from 156.8 billion yen (US$2 billion) a year earlier. Cellphone demand in Japan has slowed sharply this year as wireless operators cut sales incentives paid to retailers to keep handset prices low. Other makers have suffered too, with Sharp Corp. reducing its annual operating profit forecast by one-third earlier this month.

Asus Japan will release its first Eee notebook computer with a built-in hard drive, aiming to differentiate itself from the competition by broadening its lineup. The Eee 1000H-X will have a 160-gigabyte hard drive, largest among the so-called 50,000 yen (US$500) class of PCs. It will also have a 10-inch display, larger than earlier models. The computer will be powered by Intel's Atom
power-saving CPU and will come with the Windows XP operating system. Weighing about 1.45kg, the computer will be able to run on battery power for around 6.9 hours. It will be available in white or black and is expected to sell for about 59,800 yen (US$596).

Japanese copier and printer maker Ricoh Co (OTCPK:RICOY) gained permission from EU competition authorities to buy U.S. office equipment distributor Ikon Office Solutions (IKN). An examination by the European Commission of the $1.62 billion deal, which could be a blow to rival Canon Inc (NYSE:CAJ), found overlaps in wholesale distribution of office gear and potential problems for the manufacture of black and white photocopiers. The Commission's investigation also showed that no competitors of Ricoh are dependent on Ikon's distribution.

Media, Entertainment and Gaming

Sony Computer Entertainment Inc. will delay the launch of its latest game software for the PlayStation 3 game console as it has learned that the soundtrack features some phrases from the Koran. Sony is recalling the action game called LittleBigPlanet, which is expected to be a hit, so it can try to modify the parts using words from Islam's most holy text. Although it was planned for the game software to hit shelves in the U.S. and in Europe, the launch will be postponed for seven to 10 days. In Japan, the new game will be released in October as originally planned. The game was developed by British game software maker Media Molecule.

Semiconductors

Tokyo Electron (OTCPK:TOELF) will likely post an 82 percent fall in its annual operating profit, sharply below its own forecast due to weak orders for its machines to make chips. Tokyo Electron's operating profit is expected to total around 30 billion yen (US$298.9 million) in the year to March, against the company's projection of 51 billion yen that it revised down in August. The average of predictions by 15 analysts is a profit of 37 billion yen. Semiconductor makers have been putting off investments as they cope with plunging prices of dynamic random-access memory (NASDAQ:DRAM), used mainly in personal computers, and NAND flash memory, used mainly in digital music players and cameras. Tokyo Electron's annual sales are likely to drop 36 percent to some 580 billion yen (US$6.2 billion), below its forecast of 630 billion yen (US$7 billion).

Telecommunications

KDDI Corp. said its group net profit rose 3.7 percent from a year before to 151.1 billion yen in the April-September period despite an overall slump in sales of mobile handsets. For the first half of the fiscal year until March, KDDI, the operator of the ''au'' brand service, said its group operating revenue inched up 0.8 percent to 1.8 trillion yen (US$20.5 billion). Its operating profit climbed 5.3 percent to 262.9 billion yen (US$3 billion) while its pretax profit also increased 3.9 percent to 262.2 billion yen (US$3 billion). Following the adoption of a two-year installment plan over the summer, Japan's sales of mobile handsets have been hit by higher prices in exchange for lower-priced calls. KDDI has fallen behind rivals Softbank (SFBTF.PK) and NTT Docomo (NYSE:DCM) after the termination of its Tu-Ka mobile phone service in March, but its profits have grown thanks to lower handset subsidies paid to retailers.

Information Technology

NTT Data Corp. has purchased a majority interest in Czech systems company Sapcon in a step toward expanding its business into Eastern Europe. Sapcon specializes in the installation of ERP (enterprise resource planning) systems made by SAP AG of Germany. Established in 2005, it has a staff of about 40 sales of roughly 400 million yen (US$4.6 million) in 2007. NTT Data acquired a 51 percent stake in Sapcon for an undisclosed sum through its German subsidiary intelligence AG. NTT Data had purchased intelligence and another German information technology company, Cirquent GmbH, to strengthen its operations in Western Europe. NTT Data will use Sapcon to win more
orders for systems from corporations in the energy and communications fields that are moving into the Czech Republic.

Source: Japanese Tech Stock Weekly Summary (Oct. 20-26, 2008)