The following is excerpted from IRG's weekly stock report:
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• Toshiba Corp. (OTCPK:TOSBF) may have to issue new shares to bolster its battered capital base. The company warned last month it would post a US$3 billion net loss in the year to end-March, hit by sliding demand for semiconductors and electronics. That warning triggered downgrades by rating agencies Standard & Poor's and Moody's Investors Service, citing Toshiba's dwindling capital and a near-US$20 billion debt burden. Toshiba has been issuing commercial paper since last month and could, in theory, take on more loans, but banks are likely to be wary about piling more debt on to a capital structure so light on equity. Toshiba's shareholders' equity ratio will likely fall into single digits in the year to March, while struggling rivals NEC Corp (OTC:NELTY) and Fujitsu (OTCPK:FJTSY) have been able to keep their ratios above 20 percent. A 300 billion yen (US$3.1 billion) issue would dilute share value by nearly 40 percent. The stock has lost about 70 percent in the past year. Toshiba may eventually need up to 1 trillion yen (US$10.3 billion) to keep investing in NAND flash memory, which is used in mobile phones and portable music players like Apple Inc's (NASDAQ:AAPL) iPod.
• NTT DoCoMo Inc. (NYSE:DCM) expects to generate about 10 percent of its revenue from abroad within five years. The telecom carrier is considering mergers and acquisitions as a potential route to meeting the sales target of about 500 billion yen (US$5.1 billion) from outside Japan. Toshinari Kunieda, senior vice president and managing director of DoCoMo's global business division, said the company is targeting emerging markets. DoCoMo has received approval from the Indian government to acquire a 27.31 percent stake in Tata Teleservices Ltd. for INR129.3 billion (US$2.6 billion). The Indian government has also approved DoCoMo's acquisition of up to 20.25 percent in Tata Teleservices Maharashtra Ltd., the listed arm of TTSL, together with Tata Sons.
• Softbank Corp. (OTCPK:SFTBF) announces that the shares of its wholly-owned subsidiary, Softbank IDC Solutions Corp., will be transferred to its consolidated subsidiary, Yahoo Japan Corp. (OTCPK:YAHOF). The decision this time will enable the early establishment of the Softbank Group's strategic base for the next generation Internet business, and allow it to make further efforts towards sustainable growth and enhancement of competitiveness of the Internet business and data center business through maximizing the synergy effect of the Group.
• Sumitomo Corp. (OTCPK:SSUMY) has invested 750 million yen (US$7.7 million) in Merchantrade Asia Sdn Bhd, a Malaysia incorporated company, engaged in prepaid mobile and remittance services. Sumitomo will contribute to the company by supporting its deployment of new services like integrated service and marketing expansion as well as enhancing its corporate governance. Merchantrade capitalizes on mobile network infrastructure facilities owned by Celcom (Malaysia) Bhd. The strength of the company is its unique business model, providing both mobile and remittance services which serve foreign workers' basic needs. Merchantrade has over 94,000 active subscribers. The company is studying market acceptance to launch mobile remittance in the country.