Japanese Tech Stock Weekly Summary (Dec. 15 - 21, 2008)

by: IRG Ltd

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

• • •


  • Panasonic Corp. (PC) offered to pay as much as 806.7 billion yen (US$9 billion) to buy Sanyo Electric Co. (OTC:SANYY), gaining the lead in the global rechargeable battery market in Japan’s biggest consumer-electronics acquisition. The offer of 131 yen a share, less than the market price, is being considered “positively” by Goldman Sachs Group Inc. and 2 Japanese banks holding a combined 70.5 percent stake in Sanyo, Panasonic, the world’s biggest consumer-electronics maker. Goldman Sachs, Daiwa Securities Group and Sumitomo Mitsui Financial Group bailed out Sanyo in 2006 and would gain an 87 percent return on their investment. The acquisition would almost quadruple Panasonic’s share of the rechargeable-battery market and give it access to Osaka-based Sanyo’s solar-cell technology.
  • Konica Minolta Holdings plans to delay the start-up of a new plant in Japan that makes hightech film used in liquid crystal display panels, as sluggish flat TV demand has forced panel makers to cut output. A slew of Japanese companies, including Sony Corp (NYSE:SNE), have delayed or scrapped capital spending plans amid the global financial and economic crisis. The high-tech LCD film, known as triacetyl cellulose (TAC) film, has been an engine of growth for Konica Minolta, which with rival Fujifilm Holdings Corp (FUJI) dominates the market. The company is building a new TAC film plant in western Japan. Construction of the US$202 million factory, which will be capable of making 50 million square meters of film a year, was slated for completion in autumn 2009. Konica Minolta does not disclose TAC film sales figures, but the company expects its optics business division, which includes TAC film as well as optical pick-up lenses and hard-disk substrates, to post 205 billion yen (US$2.3 billion) in sales in the year to March 2009, or 20 percent of its total revenues.
  • Canon Inc. (NYSE:CAJ) would delay the construction and start-up of a US$196-million digital camera plant in Japan due to slow demand, becoming the latest company to modify investment plans amid the global downturn. The company will decide on new dates for the plant as it monitors conditions in the global digital camera market. Canon in October cut its digital camera sales target by 5 percent to 27.9 million units for calendar 2008 as sagging economies worldwide forced consumers to tighten their purse strings.


  • KDDI Corp. (OTC:KDDIF) plans to acquire the cable TV operations of Tokyo Electric Power Co (Tepco) for about 20 billion yen (US$222.4 million). Cable TV providers are increasingly joining hands to expand as Internet-based TV viewing gains popularity. Industry leader Jupiter Telecommunications announced last week that it would buy third-ranked Mediatti Communications. KDDI's cable TV unit, Japan Cablenet, is the second biggest in the industry. KDDI plans to purchase Tepco units Tepco Cable Television Inc and Kawagoe Cablevision Corp, both of which operate in Saitama Prefecture, near Tokyo. The deal would boost the customer base of Japan Cablenet to about 730,000 households, raising its nationwide market share to slightly more than 10 percent.


  • Toshiba Corp. (OTCPK:TOSBF) and partner SanDisk Corp (SNDK) will cut NAND flash memory production by 30 percent from January, as the global economic slowdown hits demand for the microchips used in digital cameras and portable music players. Slumping demand and excess capacity have caused semiconductor prices to plunge, pushing makers of PC-use DRAM chips in particular to seek help, and sending Toshiba's chip business into the red in the first half of the business year. Toshiba and SanDisk jointly operate 2 NAND plants that process cost-efficient 300-mm silicon wafers at a manufacturing complex in western Japan. The 2 plants have a combined capacity to handle 260,000 wafers a month. 2 other factories in the complex process 200-mm wafers and are run by Toshiba alone.

Media, Entertainment and Gaming

  • Nintendo Co. (OTCPK:NTDOY) will launch a software download service for its DSi portable game system this coming with a menu of 13 titles. The Nintendo DSiWare service is similar to the services that download application software to mobile phones, but in this case the software is downloaded via a wireless Internet connection and stored on the DSi. Nintendo hopes to push sales of the DSi far above the 20-million-unit level in Japan, a barrier that game systems have always had trouble breaching. Nintendo will cooperate with blog service provider Hatena to run a Web site where people will be able to upload flip-page animations created with Moving Memo, one of the DSiWare applications that will be available free for download.


  • Shares in Japanese social networking site operator Gree Inc. soared 45 percent in their debut on the Tokyo bourse. Gree has attracted attention with its US$150 million IPO and growth potential. Gree's debut was Japan's second-biggest this year after Seven Bank's public offering in February, and the SNS provider, currently valued at 107 billion yen (US$1.2 billion), has overtaken Mixi as the most valuable firm on the Tokyo Stock Exchange's Mothers market for start-ups. Gree expects its operating profit to increase more than five times to 5.9 billion yen (US$66 million) in the year to June, bigger than Mixi's projected 3.8 billion yen (US$42.5 million) profit in the year to March. Although Mixi has more than 15 million users, it relies mainly on advertising for its revenue while Gree has more fee-based services like its sales of popular avatars used in games.