Japanese Tech Stock Weekly Summary (Apr. 13 - Apr. 19, 2009)

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

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Hardware

• Nintendo Co. Ltd. (NTDOY.PK) said sales of its Wii game console have lost some steam in Japan, but it aims to boost demand again by launching a new version of its blockbuster "Wii Sports" software in June. Nintendo President Satoru Iwata had no plan to cut hardware prices. The Wii far outsells Microsoft Corp's (MSFT) Xbox 360 and Sony Corp's (SNE) PlayStation 3 globally. But in Japan, sales of the PS3 outstripped those of the Wii in March for the first time in 16 months thanks to new PS3 titles from Sega Sammy and Capcom. In a bid to put vigor back into Wii sales, Nintendo plans to launch "Wii Sports Resort" in June in its home market, followed by overseas release in July. Nintendo's earlier "Wii Sports" game helped drive its console sales. Strong sales of both the Wii and Nintendo's handheld DS player despite the global economic slowdown had led the company to expect a record 530 billion yen (US$5.3 billion) operating profit for the year that ended on March 31.

• Toshiba Corp. (TOSBF.PK) posted a smaller operating loss than the company had forecast after production cuts helped drive up prices of the semiconductors. Operating loss was 250 billion yen (US$2.5 billion) in the year ended March 31, 11 percent smaller than the company’s previous 280 billion yen (US$2.8 billion) loss projection. Prices of flash memory chips, which store songs and data in portable musical players and digital cameras, have surged 75 percent. Improved earnings at the television business and higher sales of so-called system LSI chips also helped the company’s overall operating results beat its forecast.

• NEC (NELTY.PK) and Panasonic (PC) will unveil nine new cell phone models running the open-source LiMo operating system. The focus of the cell phone market has been shifting to software development since Google (GOOG) and Apple (AAPL) entered the mobile market in the past two years, with phone vendors and operators increasingly looking for open source alternatives like LiMo to cut costs. The market for software platforms on cell phones is led by Nokia's (NOK) Symbian operating system, but it has lost much ground over the last year to Apple and BlackBerry maker Research in Motion (RIMM). Computer operating system Linux has had little success in cell phones thus far, but its role is increasing with the LiMo platform, and Google is using Linux for its Android platform.

• Sharp Corp. (SHCAY.PK) doubled its loss estimate for the year give slump in sales of televisions and panels, but brought forward plans for a cost-efficient factory to cut costs. The company would shift overseas some output of key components such as panels and solar cells with domestic partners to lessen the impact of foreign exchange fluctuations and control capital spending, a departure from its usual strategy of making core products at home. Sharp faced an uphill task to make the new business model work. Panel demand was recovering, prompting it to move up its date for starting production at its plant by five months to October. Sharp's 380 billion yen (US$3.8 billion) plant in western Japan will process 10th-generation glass substrates, which are bigger than earlier generation substrates and help reduce per panel production costs. Earnings were hit by mounting inventory from unsold liquid crystal display panels and televisions as consumers limit spending amid the global economic crisis, as well as restructuring costs.

Semiconductor

• Japan will cut a punitive import tariff on memory chips made by Hynix Semiconductor of Korea, ending a dispute that has damaged trade relations between the countries for the last three years. The Ministry of Economy, Trade and Industry would lower Japan’s import tariff on Hynix’s Dynamic Random Access Memory chips from the penalty rate of 27.2 percent down to 9.1 percent.