Japanese Tech Stock Weekly Summary (Oct. 27 - Nov. 2, 2008)

by: IRG Ltd

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

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  • Konica Minolta Holdings Inc. decreased full-year net profit forecast 40 percent to 42 billion yen (US$426.6 million) after decreasing net profit 22.2 percent to 29.3 billion yen (US$297.6 million) for the half-year. Revenue was up 1.5 percent to 533 billion yen (US$5.4 billion). Operating profit decreased 14.7 percent to 48.7 billion yen (US$494.6 million) and ordinary profit fell 12.4 percent to 47.9 billion yen (US$486 million). An interim dividend of 10 yen  (US$0.10) was declared and an annual dividend of 20 yen (US$0.20) per share is estimated. Full-year revenue forecast is down 6.8 percent.
  • NEC Corp., Hitachi Ltd. (HIT) and Sharp Corp. (OTCPK:SHCAY) issued dismal earnings outlooks for fiscal 2008 showing that Japanese companies are feeling increasingly pressured by flagging consumption and the growing risks of a global economic downturn triggered by the global financial and market turmoil. NEC said its group operating profit in the April-September period halved to 13.4 billion yen (US$136.1 million). Its pretax profit dropped 28.3 percent to 7 billion yen (US$71.1 million). The company attributed the decline to a sales drop in the network systems area and in its electron devices and semiconductor business as well as growing development costs. The electronics maker has decided not to pay an interim dividend initially set at 4 yen (US$0.04) per share due to possible impairment losses from historic sell-offs on stock markets worldwide. It also did not disclose a full-year dividend forecast, leaving open the possibility that it will skip payment of an annual dividend.
  • Fujifilm Holdings (FUJI) would cut 1,250 jobs at its printer unit, Fuji Xerox Co., amid falling demand. The company had a 25 percent drop in operating profit for the six months to September and would spend up to 35 billion yen buying back up to 3.4 percent of its shares. The Japanese maker of digital cameras and photo films would also transfer about 1,250 Fuji Xerox employees into marketing jobs from administrative and other tasks. The job cuts at Fuji Xerox would be made through early retirement, and cost an estimated 8 billion yen (US$81 million) in the year to next March, and an additional sum in the next year. The cuts will trim about 5 percent from Fuji Xerox's staff.
  • Sony Corp. (NYSE:SNE) said a total of five personal computer makers, including Hewlett-Packard Development Co. (NYSE:HPQ) of the U.S. and Japan's Toshiba Corp. (OTCPK:TOSBF), are set to recall about 100,000 of its lithium ion batteries used in their notebook personal computers due to overheating concerns. The other three PC makers are Dell Inc. (NASDAQ:DELL), Lenovo Group Ltd. (OTCPK:LNVGY) and Acer Inc. 40 incidents of overheating, including some causing smoke or flame, have been reported overseas involving notebook computers using its 2.15Ah lithium ion cells. Of the 40, four led to minor burn injuries and 21 caused minor property damage. The batteries subject to the recall are those made from October 2004 to June 2005, and production line adjustments made during the period may be the cause of the overheating. The batteries subject to the worldwide recall include about 2,000 packs sold in Japan.

Media, Entertainment and Gaming

  • Perfect World (NASDAQ:PWRD) announced that its 3D multiplayer online role-playing game Chibi had found its way into the Japanese market by signing up with local partner C&C Media Company Limited. Chibi is the fourth game of Perfect World to land on Japan following the heels of Perfect World International version, Wulinwaizhuan, and Zhuxian. Chibi has been well received by game players since its debut early this year for its vivid image, unique system configuration, and historical subject. The game has thus far been introduced to Malaysia, Taiwan, Hong Kong, etc.
  • Nintendo Co. Ltd. (OTCPK:NTDOY) will likely launch a new model of its top-selling handheld player, the DS, in overseas markets by the summer of 2009. Nintendo will start selling the DSi, which can take pictures, play music and is slimmer than the current model, for 18,900 yen (US$192), in a move to revive slowing domestic sales ahead of the critical holiday season. Nintendo previously planned an overseas DSi launch in 2009. DS sales in the April-September fiscal first half grew 3 percent from a year earlier to 13.73 million units worldwide, beating Sony Corp's PlayStation Portable by 2-to-1. The DS and Wii console, which has outstripped both Sony's PlayStation 3 and Microsoft Corp's (NASDAQ:MSFT) Xbox 360 in global sales, have been Nintendo's twin growth engines in recent years.


  • Softbank Corp. (OTCPK:SFTBF) said its group operating profit for the April-September period rose 7.3 percent from a year earlier to an all-time high of 180 billion yen (US$1.8 billion) because of the strong profitability of its Internet, fixed-line communications and broadband infrastructure operations. The Internet conglomerate and the company, which usually does not release a full-year earnings outlook, expects its operating profit to rise 4.8 percent to 340 billion yen (US$3.5 billion) in the business year to March 2009. But its first-half earnings results were mixed with group net profit falling 11.5 percent from a year earlier to 41.12 billion yen (US$122 million) and group sales sliding 2.6 percent to 1.33 trillion yen (US$13.5 billion) due to a decline in sales of its mobile handsets despite steady growth in the number of its subscribers. Softbank, which has a share of around 18 percent in Japan's mobile phone services market, acquired an additional 142,800 subscribers in September, beating its bigger rivals for the 17th consecutive month.
  • Japan's DSL service provider eAccess (OTC:ECLTF) would conduct a tender offer for DSL service provider ACCA Networks, in which it already has a 45.1 percent stake, and plans to merge with the company in May 2009 in order to survive in a shrinking DSL market. The tender offer will be conducted through November 28, 2008. The move came as Japan's DSL subscriber base continues to decrease, especially in urban areas, as a result of growth expansion of fibre-to-the-home (FTTH) services. With DSL as their main businesses, both eAccess and ACCA Networks are facing a challenging market environment. eAccess hopes that a merger with ACCA would help improve efficiency of their respective operations by generating synergies from the integration of sales, marketing, distribution, customer services and back-office functions. eAccess still sees some growth potential in Japan's DSL market.
  • NTT DoCoMo (NYSE:DCM) reported that its operating revenues for the first half the current fiscal year ending March 31, 2009 amounted to 2.3 trillion yen (US$23.2 billion), down 2.5 percent year-on-year. Operating income for the six months jumped 41.2 percent to 576.9 billion yen (US$5.9 billion). Net income rose to 346.7 billion yen (US$3.5 billion). For the quarter ending 30 September 2008 alone, its operating revenues amounted to 1.1 trillion yen (US$11.1 billion), while operating income and net income stood at 280.5 billion yen (US$3 billion) and 173.1 billion yen (US$2 billion), respectively. The operator reported 53.9 million mobile subscribers at end-September, including 46.4 million 3G "FOMA" and 7.5 million 2G "mova" subscribers. NTT's strong profit rise was partly attributable to its introduction of a new business model last November which lowered services fees but with higher handset prices for mobile users.