Japanese Tech Stock Weekly Summary (Nov. 24 - 29, 2008)

by: IRG Ltd

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

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  • Panasonic (PC) has slashed 90% from its full year profit forecast, announcing it is struggling with sluggish consumer spending and intensifying price competition amidst the economic crisis. The company has revised its net profit forecast downwards to just 30 billion yen (US$315 million), from its US$3.2 billion forecast from just a month ago. Operating profit is expected to reach US$3.5 billion, down from the predicted US$3.8 billion. Panasonic is expecting a 14% decline in sales this quarter. Overall revenue is expected to reach US$89.2 billion, down around 8% from the earlier forecast US$96.6 billion. The company also blamed the revised forecast on the rapid appreciation of the yen, which Panasonic says has shaved US$231 million from its operating profits. The yen has gained 17% against the dollar this year.
  • The global digital camera market may contract next year, according to Canon (NYSE:CAJ), as sluggish economic conditions dampen consumer demand. Canon was aiming to cut US$1 billion in costs with a new computer system to be completed by 2010. The economic slowdown has started to hit sales of digital single-lens reflex (SLR) cameras high-end models that use interchangeable lenses, but overall Canon's camera sales are solid ahead of the year-end shopping season. The outlook, however, has become increasingly murky and the US$40 billion digital camera market may shrink next year in unit terms.
  • Toshiba Corp. (OTCPK:TOSBF) is considering delaying construction of two new domestic chip plants amid slowing demand and falling prices. Toshiba faces weakening consumer demand for memory hungry electronics because of the financial crisis and the prospect of a lingering economic downturn. The company had not made a decision to push back construction of the two plants. It was always studying the best timing to build new plants to meet demand. Toshiba had planned to start building semiconductor factories in Iwate prefecture in northern Japan and Mie prefecture in western Japan in early 2009 and to begin operations in 2010. One of them was going to be jointly run with partner SanDisk (SNDK).


  • Goldman Sachs Group Inc. said it broke off negotiations yesterday to sell a stake in Sanyo Electric Co. (OTC:SANYY) to Panasonic Corp. because of disagreements over terms. Goldman stopped discussions because Panasonic had no intention of making an offer for all of Sanyo’s stock. Goldman considers Panasonic’s offer to be too low as it’s less than Sanyo’s current market price. Buying Sanyo would give Panasonic the world’s largest maker of rechargeable batteries an entry into solar-cell production. Panasonic gained Sanyo’s support this month to take control, clearing the way for talks with Goldman, Daiwa Securities SMBC Co. and Sumitomo Mitsui Financial Group Inc. (OTCPK:SSUMY), which together hold preferred stock equal to about a 70 percent stake now valued at US$6.8 billion.
  • Elpida Memory Inc. (OTC:ELPDF) Chairman Yukio Sakamoto said that the company will consider merging with Promos Technologies and is assessing the feasibility of merging with PowerChip Semiconductor Corp. (PSC). The executive recently flew to Taiwan to meet with his counterpart at PSC to show determination to work with the Taiwanese strategic partner regardless of the bearish DRAM market. Some industry watchers believe in addition to solidifying partnership with PSC, seeking to merge with Promos is another purpose behind Sakamoto’s visit to Taiwan. Elpida would only merge with Promos if it settles its debt and cuts its technological tie with Hynix Semiconductor of South Korea. Industry watchers expect Elpida to likely take over Promos in partnership with United Microelectronics Corp. (NYSE:UMC) considering that UMC currently has the second-largest stake in Promos, as well as having close technological ties with Elpida.


  • KDDI Corp. (OTC:KDDIF) will refund about 16.72 million yen to customers who have been charged erroneously for a mobile Internet service they did not use. KDDI, the provider of the ''au'' mobile phone service, said the erroneous charges were applied due to a software glitch in 16,851 cases during a two-year period from Sept. 21, 2006 to Oct. 31, 2008. The cases involve 14 handset models manufactured by Casio Computer Co., Hitachi Ltd. and Panasonic Mobile Communications Co. since September 2006. The glitch was discovered after customers complained to the company about Internet service charges that were included in their monthly bills even though they had not accessed the Internet by connecting their mobile phones to personal computers.
  • Nokia (NYSE:NOK) announced that it will give up most of its attempts to compete in the Japanese market, keeping only the Vertu luxury handset brand. Nokia has been able to capture just a fraction of the advanced Japanese market, which is dominated by local brands. Nokia's Japanese division will now focus on R&D and outsourcing for the global market. There has been no word on how this decision will effect Nokia's reported decision to launch a Mobile Virtual Network Operator (MVNO) business in Japan on NTT DoCoMo's (NYSE:DCM) network. This decision has not yet been formally announced by either party, and appears in doubt as the purported aim of the move was to promote Nokia handsets.