Japanese Tech Stock Weekly Summary (Feb. 9 - Feb. 15, 2009)

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

• • •

Hardware

• Panasonic Communications Co. (PC) has decided to shut down in June two domestic factories that develop and manufacture business-use fax machines, including digital multifunction devices. The Panasonic Corp. unit employs slightly more than 850 people at the two factories in Utsunomiya, Tochigi Prefecture, and Ojiya, Niigata Prefecture. These workers will be offered jobs at Panasonic Communications' headquarters in Fukuoka and at a cordless-telephone factory in Tosu, Saga Prefecture. Those who choose not to make the long-distance moves necessary to take up the new postings will be offered early retirement packages.

• Pioneer Corp. (PNCOF.PK) will cut 10,000 jobs as lower-than-expected sales of car electronics and unprofitable television operations force it to project a wider annual net loss. The company will withdraw from the TV business by March 2010 and cut 10,000 jobs worldwide, including 6,000 full-time positions. The net loss will probably be 130 billion yen (US$1.44 billion) in the year ending March 31. Pioneer joins Sony, Panasonic and NEC in forecasting losses and cutting jobs as the global recession curbs demand for consumer electronics. The company is relying on sales of car-navigation systems to restore profitability even as auto sales plunge.

Semiconductors

• Elpida Memory (ELPDF.PK) has agreed to integrate its operations with three Taiwan chipmakers in an attempt to survive severe slumps in demand and prices. Elpida will tie up with Powerchip Semiconductor Corp., ProMOS Technologies Inc and Rexchip Electronics Corp. The integrated entity would be the world's second-largest DRAM maker after South Korea's Samsung Electronics Co. (SSNKF.PK) It also would be the first integration of a Japanese chipmaker with foreign firms. The deal would likely allow Elpida to tap the financial assistance Taiwan is considering for its ailing semiconductor industry. Elpida may also apply for help from an industry rescue plan being considered by the Japanese government. Elpida President Yukio Sakamoto is expected to sign a basic agreement with the Taiwan chipmakers and the Taiwan government.

Telecommunications

• The open offer by Japan's NTT DoCoMo Inc. (DCM) and India's Tata Sons Ltd. for a 20 percent stake in Tata Teleservices (Maharashtra) Ltd. will start Feb. 19 and close March 12. The last day for revising the open offer price is Feb. 27. The open offer had earlier been deferred due to a delay in getting regulatory clearance. NTT DoCoMo had agreed to buy a 26 percent stake in unlisted Tata Teleservices Ltd. for about US$2.7 billion. It had also agreed to make a joint open offer for shares in Tata Teleservices (Maharashtra), the listed unit of Tata Teleservices with Tata Sons.

Internet

• NTT and Microsoft (MSFT) have teamed up to jointly market online ads on major Web portals starting in April, the Nikkei business daily reports. The companies aim to forge a broad alliance which will eventually include social-networking sites, targeting advertising revenues of 20-30 billion yen (US$220 million to US$330 million) in five years. Currently slated to participate are NTT-operated portals goo, OCN and plala; Microsoft's MSN; the gateways of So-net Entertainment Corp. and Nifty Corp.; and Dwango Co.'s Nico Nico Douga video-sharing site. The NTT-Microsoft camp currently ranks the second in Japan, far behind the industry leader Yahoo! Japan, but ahead of Google (GOOG). The joint marketing effort will focus on banner ads, with orders placed through the alliance distributed to all of the participating sites. NTT and Microsoft will also work together to develop ways to get a better grasp of ads' effectiveness. Amid the current economic slowdown, with companies cutting back advertising expenses, Internet companies which count on online ad revenues are seeking to cut costs and improve operational efficiency.

Comments

[Mad Hedge F...:]

Every night the evening news in Japan refers to the “Great American Depression”. Do they know something we don’t? I hear largely inaccurate comparisons to our current economic debacle to Japan’s lost decade on an almost daily basis. But there is one thing both have in common. Nobody believes for a second the securities the banks own are worth what they say they are worth. That’s what bank hoarding of capital is telling you. The question here remains, how quickly can the banks be forced to face the music?

Feb 18 11:57 AM