Toshiba (OTCPK:TOSBF) may finally be launching its own Blu-ray player. Toshiba, which lost the HD DVD vs. Blu-ray battle in early 2008, is reportedly readying a player that will read both Blu-ray discs and DVDs and will appear in stores by year's end. Toshiba had been thinking of developing yet another technology to combat Blu-ray but gave up because of the huge growing market for Blu-ray players and discs. The company will start with play-only models but may consider a recordable Blu-ray player if market demand calls for it, according to local newspaper. Toshiba's entry into the Blu-ray arena would mark the last holdout among all the major electronics manufacturers.
Fujitsu Ltd. said it is targeting record profit in the 12 months ending March 31, 2012, as spending on software and information-technology infrastructure recovers. Net income will probably be 130 billion yen (US$1.38 billion) for the fiscal period while operating profit may reach a record 250 billion yen (US$2.6 billion) on sales projected at 5 trillion yen (US$52.7 billion). The company, which forecasts a return to profit this fiscal year, is selling its money-losing hard-disk-drive business to Toshiba to focus on semiconductor and software operations. Fujitsu also plans to outsource some chip production to Taiwan Semiconductor Manufacturing Co. (TSMC) to cut spending and help make the unit profitable next year.
Consolidated sales for the April-June quarter by Japan's Disco Corp. dropped 48 percent on the year to 9.2 billion yen (US$98.3 million) but the figure represents a 42 percent increase from the January-March quarter. Sales of machinery for cutting and grinding semiconductor silicon wafers have been sluggish as customers hold back on capital investment. But sales of expendable supplies grew in line with higher operating rates at chip-making facilities around the world. The company also said that its parent-only sales for the quarter tumbled 52 percent on the year to 6.8 billion yen. It reported a net loss of 900 million yen.
Sony Corp. (NYSE:SNE) will break down its earnings results in new categories to reflect changes made in April to its organizational structure. Its electronics business was consolidated into the Consumer Products & Devices Group, which also consists of LCD televisions, digital cameras and semiconductors. Its game business is now part of the Network Products & Services Group, which also includes personal computers and portable music players. Music entertainment and business-to-business operations are now independent segments. The motion pictures and financial services segments will remain the same. The reorganized business segments will be reflected in the firm's April-June results. Dividing the earnings results into new categories may help investors better understand Sony's business, but it will make comparisons with past performances difficult.
Elpida Memory Inc. (OTC:ELPDF) is reacting calmly to the Taiwanese government's announcement of a change in its DRAM rescue plan, as the company recently secured a total of 140 billion yen (US$1.5 billion) in financial assistance from the Development Bank of Japan and others. Receiving rescue funds from Taiwan was seen as crucial for Elpida's survival amid a severe slump in the DRAM market. The Taiwanese government's previous rescue plan centered around a tie-up between Elpida and TMC, a public-private DRAM joint venture to be established under the lead of the Taiwanese government. Under the old plan, Elpida was to provide cutting-edge DRAM technology for use by Taiwanese companies, and the Elpida-TMC alliance was to receive publicly funded financial assistance. But the government there now plans to provide funds to up to two recipients and accept applications from domestic DRAM makers. The Elpida-TMC alliance is still in the running for these funds, but will likely have to wait longer and may get less because of the additional recipient.
NTT DoCoMo Inc's (NYSE:DCM) group operating profit likely fell 16 percent to about 250 billion yen (US$2.68 billion) in the April-June quarter as the year-earlier boost from reduced sales costs wore off. Quarterly sales likely dropped 2 percent to around 1.15 trillion yen (US$12.1 billion) and handset unit sales may have dropped adding that average revenue per user also appears to have fallen. However, DoCoMo added a net 112,400 contracts in June alone just 500 fewer than Softbank Corp. For the full year ending next March, DoCoMo is expected to maintain its forecast of a 1 percent drop in sales to 4.38 trillion yen (US$46.2 billion) and a nearly flat operating profit of 830 billion yen (US$4 billion).
The Nikkei English News reported that NTT Data Corporation is planning to acquire BNI Systems Corp., the parent of Wuxi Huaxia Computer Technology Co., Ltd. NTT is a provider of system integration, networking system services, and related services, while Wuxi Huaxia is a China-based software development company. BNI had revenues of approximately 700 million yen (US$7.5 million) for the year ended July 2008.
KDDI Corp. (OTC:KDDIF) said its net profit for the first quarter ended June rose 19 percent from a year earlier, as cost-reduction efforts offset sluggish revenue. KDDI posted a net profit of 86.4 billion yen (US$912 million) in the three months ended June 30. Revenue fell 1.9 percent in the April-June quarter. Average monthly revenue per user fell to 5,600 yen (US$59.00) in the first quarter from 5,900 yen (US$62.24) a year earlier. The operator of “au” brand mobile phone services succeeded in reducing operating costs, partly by spending less on handset sales promotions.
Samsung SDI Co. said that its net profit rose 17 percent in the second quarter of this year from a year earlier mainly due to increased income from equity investment. Net income came to 58 billion won (US$46.4 million) in the April-June period, compared with 49.6 billion won (US$39.8 million) a year ago. Sales fell 6 percent on-year to 1.2 trillion won (US$955 million) during the same period on the back of a rise in overseas orders and operating profit increase 33 percent from a year ago. Samsung SDI attributed the rise to earnings from its stake in a joint venture with Samsung Electronics Co.
Pixelplus Co., Ltd., (PXPL) announced unaudited financial results for the first quarter of fiscal 2009 ended on March 31, 2009 with revenue of 3.5 billion won (US$2.6 million), compared to 4.5 billion won (US$3.3 million) in the fourth quarter of fiscal 2008, and 3.4 billion won (US$2.5 million) in the first quarter of fiscal 2008. The Company's lower-than-expected revenue was primarily due to the seasonality of sluggish sales in Asia typically exhibited annually in the first quarter, and weaker-than-anticipated sales to Chinese distributors and module makers. Pixelplus is a fabless semiconductor company in Korea that designs, develops, and markets CMOS image sensors for various consumer electronics applications,
South Korean TV makers claimed the largest market share of the global TV market during the first three months this year, widening their lead over Japanese and Chinese competitors. South Korea's Samsung Electronics Co. (OTC:SSNLF) and LG Electronics Co. (OTC:LGERF) together gained a market share of 33.4 percent in the first quarter of 2009. They had a large margin over the 23.3 percent held by Japanese TV makers Sony Corp., Sharp Corp. (OTCPK:SHCAY), Panasonic Corp (PC). During the same period last year, South Korean makers held a 29.0 percent market share, while Japanese counterparts followed with 20.3 percent. Samsung Electronics and LG Electronics also beat out Chinese TV makers TCL Corp., Skyworth Digital Holdings Co. and Hisense Electric Co. East Asia-based TV makers grabbed a 69.1 percent market share in total for the quarter. The Netherlands' Philips Electronics N.V., with 4.1 percent market share, was the only company not from East Asia to make it into the world's top 10 TV makers.
LG Electronics Inc. reported record quarterly profit, fueled by demand for flat- panels TVs, and forecast higher sales in the current period. Second-quarter net income climbed 62 percent to 1.15 trillion won (US$917 million), from 706.9 billion won (US$567 million) a year earlier. Profit was almost 50 percent higher than the 770.7 billion won (US$618.5 million) median estimate in a Bloomberg survey of 17 analysts. LG Electronics plans to overtake Sony Corp. in terms of LCD TV shipments this year by offering wireless and energy-saving models. The uncertainty in the global economy will continue in the current period.
Samsung Electronics would invest 5.4 trillion won (US$4.3 billion) in green research and development and facilities to make the company eco-friendly by 2013. Of the total, 3.1 trillion won (US$2 billion) will be spent to develop products which cause less damage to the environment, and the remainder on energy-saving technologies and the environmental improvement of manufacturing facilities. Samsung Electronics did not detail how it would finance the initiatives but had around 5.3 trillion won (US$4.2 billion) in cash and cash equivalent at end-March. Samsung's plan includes reducing greenhouse gas emissions from manufacturing facilities by 50 percent, cutting total indirect greenhouse gas emissions from all products by 84 million tons through 2013, and ensuring all of its products are more environmentally friendly by increasing energy efficiency through measures such as cutting standby power consumption.
Samsung Electronics is expected to invest at least 1 trillion won (US$790 million) in a semiconductor production facility in the second half of 2009. Kwon Oh-hyun, president of Samsung's semiconductor division, said at an industry event that Samsung expected its investment in the second half to rise slightly from the first half. The company has repeatedly declined to disclose the size of capital investments planned for this year or already made so far. The chip division investment in the second half would focus on introducing more advanced production technology, such as 40-nanometre circuitry for DRAM chips and 30-nanometre for NAND flash memory.
LG Chem Ltd. will spend 430 billion won (US$341 million) to boost output of glass sheets for liquid crystal display (LCD) panels. LG Chem announced the investment plan a day after it posted a 31.2 percent jump in second-quarter net profit. LG Chem, which supplies glass sheets to LCD makers, is benefiting from a shortage of the key parts as LCD makers such as Samsung Electronics and LG Display, are increasing prices of the flat panels on the back of strong demand for LCD televisions and computer screens in China.
The Korean presidential office announced on July 12 that Swedish telecom equipment vendor Ericsson (NASDAQ:ERIC) is expected to invest in a joint project to develop 4G LTE (Long Term Evolution) technology, Reuters reported. The Korean presidential office added that Ericsson's five-year investment project is estimated at a ballpark figure of US$1.5 billion and is projected to increase Ericsson's staff in Korea to approximately 1,000 from 80 at present. After the announcement, Ericsson made clarifications to the Korea Communications Commission that the amount of its investment is still not fixed and that details of its investment plan are still being fleshed out and no definite scheme has been reached yet.
China's Internet users numbered 338 million at the end of June this year. This translates to 40 million new regular Internet users in China in the first six months of this year. And there is still room for growth, given that Internet penetration stood at 25.5 percent at the end of June, up from 22.6 percent at the end of 2008. Mobile networks and devices play an important role in providing access to the Internet. 155 million people in China access the Internet via mobile. Although the spread of 3G networks and devices in the course of 2009 has helped drive mobile Internet take up, consumer enthusiasm is currently limited. A total of 65 percent of Internet users do not intend to use the mobile phone to access the Internet.
China small and medium businesses are expected to spend more on Internet access than on their websites and online advertising combined in 2009 including US$3.7 billion on Internet access, US$1.8 billion on online advertising, and US$1.5 billion on website hosting, development and maintenance in 2009. The reverse trend is observed in developed APAC countries like Australia, Japan, and Korea. Currently, there are approximately 3.2 million small and medium businesses in China. Of this, 1.3 million SMBs have at least one PC, and 93 percent are using broadband to access the Internet. This means more than 59% of China SMBs are without PC and Internet access. For China Internet access providers and PC vendors, this spells tremendous opportunities in terms of customer base and future growth.
Baidu Inc.'s (NASDAQ:BIDU) second-quarter earnings rose 45 percent as the Chinese Internet company continued to post strong revenue growth and add advertisers. The company also offered strong third-quarter revenue guidance of US$184 million to US$189 million, topping the US$182 million expected by Wall Street. Baidu, which holds a commanding share of the Internet search market in China, warned earlier this year that its online marketing customers might scale back advertisements amid a weakening economy, but it has since kept the problem in check as the Chinese economy has rebounded.
China's sales of cell phones in the second quarter of this year topped 33.07 million units, down 7.2 percent quarter on quarter, but the proportion of 3G handsets was below one percent. As sales promotion during the traditional Chinese New Year period of 2009 had satisfied consumers' demand for mobile phones in advance, China's cell phone entered slack season in April, and sales in branded handset market dropped. Statistics show that the sales of GSM handset in China declined sharply in the second quarter from January-March to 30.33 million units, representing a decrease of 7.5 percent on quarter. As China Telecom (NYSE:CHA) gradually cut the subsidy on 2G terminals, sales volume of CDMA cell phones, with the certification owned by the carrier alone, decreased again in April-June to 2.497 million units after two consecutive quarters' soar, dropping 12.7 percent from the previous quarter. Sales of 3G handsets topped 242,000 units in China during the second quarter of this year, including 131,000 units of CDMA EVDO standard and 64,000 units supporting TD-SCDMA standard. Telecom operators took actions to boost the 3G terminal industrial chain, and issued more reasonable pricing policies with higher subsidies.
KongZhong Corp. (KONG) co-founder, president and chief technology officer (CTO) Nick Yang, has tendered his resignation effective July 31, 2008. KongZhong also announced its appointment of educational service provider ChinaEdu Corporation and IPTV broadband solutions provider UTStarcom founder Charles Xue to the board of directors. Xue will replace Xiaolong Li, who resigned July 20 for personal reasons.
China Unicom (NYSE:CHU) gained 862,000 new GSM cellular service subscribers, for June 2009, summing the total number to 140.38 million. The company reported a decrease of 255,000 in local access subscribers, and was met by 980,000 new broadband subscribers. The total subscriber numbers in these two services amounted to 108.45 million and 34.91 million, respectively, by the end of June.
It is expected that ZTE Corp. (OTCPK:ZTCOF) and Huawei Technologies Co. Ltd. will spend at least 500 million yuan (US$73.18 million) replacing base stations provided by Datang Mobile Communications Equipment Co. Ltd. during China Mobile's (NYSE:CHL) first phase of TD-SCDMA network construction. ZTE would replace 3,000 Datang Mobile-made TD-SCDMA base stations for China Mobile's Guangzhou subsidiary while Huawei would replace approximately 4,000 base stations originally deployed by Datang Mobile on behalf of Shanghai Mobile. Both privately-owned companies will undertake the task at no cost to China Mobile. Datang Mobile locked in 27.46 percent of the network equipment tender for first phase construction, while ZTE was the biggest winner, accounting for 45.54 percent of the total contract value. ZTE, Huawei and Datang Mobile also attained sizeable portions of China Mobile's second and third round network equipment tender.
China Telecom ended June with 49.05 million broadband customers after adding 810,000 new subscribers during the month. In the year to date, China Telecom attracted 4.78 million new broadband customers. On the fixed voice market, the company shed 1.39 million customers to end the month with 199.36 million local access lines in service. China Telecom further added 2.37 million mobile customers to reach a total of 39.28 million. In the year to date, the company has gained 11.37 million mobile subscribers.
China's three carriers, China Mobile, China Unicom and China Telecom, injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan (US$29 billion) in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.8 million yuan (US$11.5 million) on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. In June, their expenses on online advertising fell, but still stayed above 100 million yuan (US$14.6 million) to 115 million yuan (US$16.8 million).
An industrial insider has revealed that China's leading telecom equipment manufacturer ZTE Corp. has taken the lead in China Mobile's third phase TD-SCDMA equipment purchasing bid and thereby acquired a 34 percent market share. Kang Zhiyi, an analyst with TX Investment Consulting, said the market had predicted that a 35 percent share would be won by ZTE, so the 34 percent share was in line with market expectation. Besides, the producer had respectively taken 46.78 percent and 28 percent shares in the bids during the first two rounds, and will now serve as China Mobile's largest TD equipment provider in terms of market share.
Commonwealth Bank of Australia (CBA) has raised its stake in China Communications Services (CCS) to 11.02 percent from the previous 10.95 percent. Information from HKEx showed that CBA on July 13 bought around 1.52 million shares of CCS for HK$7.04 million (US$908 million) at an average share price of HK$4.62 (US$0.60) per share. Shares of China Communications Services, a subsidiary of China Telecom, edged up 0.64 percent.
Media, Entertainment and Gaming
China's mobile game market size hits 520 million yuan (US$75.9 million) in the second quarter of this year, up 32.37 percent quarter on quarter. Revenues from China Mobile's charges on information reached 230 million yuan (US$33.6 million), increasing 21.3 percent quarter on quarter. China Mobile’s quarterly growth rates of information fees in the first half of this year were over 20 percent, vs. the –0.06 percent average quarterly growth in 2008. It's new game operating platform contributed most of the growth in its information fees, which topped 67.9 million yuan (US$9.9 million) in the second quarter, accounting for 30 percent of the total, while the growth of the old one slackened continuously. Information charges earned from the new game platform will keep on growing, with enrichment of mobile games on the platform as well as increase of payable games.
The Chinese online gaming industry is expected to develop rapidly with sales income increasing 30-50 percent this year. The sales this year were forecast to be 24-27 billion yuan (US$3.51-3.95 billion), which would bring about 67 billion yuan (US$9.8 billion) in income for telecommunications, IT and other related industries. The official made the remarks at a forum during the seventh session of the China Digital Entertainment Expo and Conference (Chinajoy), the country's largest game convention. The online gaming industry showed great potential in independent research and development.
Electronic Arts (ERTS) and NetDragon Websoft (OTC:NDWTF) announced a licensing agreement for the development of a new MMORPG based on "Ultima Online" from Electronic Arts. As part of the agreement, NetDragon will develop the new Ultima Online(TM) in collaboration with EA's Mythic Entertainment, and have the exclusive operating license for China, Hong Kong, Macau and India.
The9 Limited (NASDAQ:NCTY) has entered into an agreement with USERJOY Technology Co., Ltd., an online game developer in Taiwan, for an exclusive license to operate Kingdom Heroes 2 Online, a 3D MMORPG, in mainland China. Kingdom Heroes 2 Online is a 3D Fantasy MMORPG which stresses on the core feature of Kingdom Wars that maintains a strong community in the game. Kingdom Wars allows hundreds of thousands gamers to fight in the same map. Gamers can bring soldiers and operate the huge siege engine such as catapult to conquer the city; even more, they can experience the exciting vessel battle on the sea. Kingdom Heroes 2 Online breaks through the original 2.5D side-scrolling restriction and evolves to the 3D characters and scenes. With seamless map, massive content upgrade and new battle mode, it is considered as a popular MMORPG product for our 2010 pipeline.
CDC Corp. (NASDAQ:CHINA) business unit CDC Games estimates that second quarter 2009 revenue will increase by roughly 50 percent over the first quarter. CDC Games recorded US$6.3 million in revenue from continuing operations in the first quarter, down 27 percent year-on-year. The company attributed the increase to a rebound in metrics for licensed MMORPG Yulgang after it launched version "Nan Lin Feng Yun" in late March 2009.
Hewlett-Packard Co. (NYSE:HPQ) inked a memorandum of understanding with the municipal government of Suzhou, a major city in Jiangsu Province, to build a software outsourcing service center in the city. The outsourcing service center will provide HP's foreign and domestic clients in Suzhou with services such as consulting, design, development, testing, implementation and management. The two sides will first cooperate to build a data center and information management and service platform in the International Technology Park in Suzhou Industrial Park. They also plan to build a public logistics platform and a public information technology service platform for small and medium-sized enterprises in Suzhou.
Industry insiders estimate MediaTek Inc. (OTCQB:IMKI) to deliver a record 100 million sets of chips for mobile phones throughout the third quarter due to the revitalizing demands for counterfeit mobile phones and exports of the phones in mainland China. They previously expected the No.1 supplier of mobile phone chipsets in the mainland to see shipments lose steam in light of slipping demands and exports of the phones in the Chinese mainland toward the end of the second quarter. Throughout last quarter it delivered a record 80 million sets. Beginning early this month, the mainland’s demands and exports of the phones have instead picked up, clearing a huge number of the inventory backlogs of MediaTek MT6225 chips at phone makers. With the traditional September peak season for mobile phone sales in the mainland approaching, the mainland’s handset makers are stepping up replenishments of inventories of MediaTek chipsets.
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