Japanese Tech Stock Weekly Update

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

Internet

• Moody’s Investors Service announced its upgrading of Softbank (SFTBF), as it pointed to the Internet firm’s acquisition of Vodafone’s Japanese unit as a factor that should boost its competitiveness. In the announcement, the risk evaluator upgraded Softbank’s long-term debt rating and issuer rating to Ba2 from Ba3, with a stable outlook. Softbank completed a deal in April to buy Vodafone Japan for US$15 billion. Softbank also owns Yahoo Japan. The company said it plans to rename the entity Softbank Mobile and remove the name of the British firm, which faced problems when it entered the Japanese market. Moody said the move will add diversification in the Japanese telecommunication market. Softbank said it will put more money into the Vodafone unit.

Mobile/Wireless

• Sony (SNE) announced that it will market in the U.S. a first-of-a-kind wireless broadband device allowing users to exchange online voice and text messages, browse the Internet and listen to music. The palm-size personal communicator, named mylo and aimed largely at university students, is capable of operating in Wi-Fi networks in public spaces or at home, the Japanese electronics giant said. The mylo -- standing for "my life online" -- will be sold in September for about US$350 in the U.S. market. The mylo can scan for available wireless networks and its HTML browser lets users connect to full web pages on the Internet as well as send e-mails. The gadget has a built-in speaker for listening to music stored in its one-gigabyte flash memory, which can also store digital pictures.

• Softbank reported its fourth straight quarter of profit, with the company ascribing the growth on increased subscriptions from its broadband and fixed-line services and earnings as well from its Vodafone K.K. unit. The company announced a net income totaling 1.4 billion yen (US$12 million) in the three months ended June 30, compared with the 11.2 billion yen (US$96.2 million) it reported a year earlier. Analysts noted that the company generated profit as promised. Softbank also disclosed that its spending target is now doubled to about 500 billion yen (US$4.2 billion) for increased wireless network coverage aimed at its rivals NTT DoCoMo Inc. and KDDI Corp.

Hardware

• Matsushita Electric Industrial (MC) disclosed that it was looking to its JVC unit turning profitable this year, even as it stated that it will not interfere in the recovery efforts of JVC. Victor Co of Japan or JVC is 52.4 percent owned by Matsushita, the world’s largest consumer electronics maker. A Matsushita official noted that JVC’s loss of 1.9 billion yen (US$16.3 million) in the fiscal first quarter was smaller than what it had originally expected. JVC, which accounts for 8 percent of Matsushita's group sales, aims for an operating profit of 10 billion yen (US$86.0 million) in the business year to March, a reversal from a 6.9 billion yen (US$59.3 million) loss a year earlier. Outside of the losses at JVC, Matsushita posted a 41.5 percent rise in its quarterly profit, which was brought about by demand for its plasma TVs and digital cameras.

• Sanyo Electric (SANYY) announced its global TV alliance with Taiwan’s Quanta in an agreement that will allow them to work together to acquire materials. Under the deal, Sanyo would spin off the development and purchasing operations of its TV business and establish a new company in October this year. The agreement would also see Quanta Computer getting a 19 percent stake in that company. The company to be formed in the alliance will be called Sanyo Visual Technology. It will cover development and purchasing of Sanyo’s TV business worldwide, including Japan, North America, Europe, and the mainland. The TV business includes old-style cathode ray tube TVs as well as newer and slimmer liquid-crystal display panel TVs. The two companies said they would continue to discuss setting up a joint venture for flat-panel TVs. Sanyo has been moving aiming to turn around its business, partly by forming alliances with companies to lighten its production costs for mass consumed products. Quanta is the world’s largest notebook computer design and manufacturing company. It also has a display maker, storage operations, and other units in its group.