• Nintendo’s (OTC:NTDOY) DS and Sony’s (SNE) PlayStation Portable handheld players led a 4.9 percent decline in US video-game sales to $823.5 million in May. Sales of the touch-screen DS fell 39 percent, while PSP sales declined 41 percent. Overall sales of video-game hardware slumped 20 percent to in May. Portable game players are facing increasing competition from Apple’s (AAPL) iPhone, iPad and iPod Touch, as consumers look to devices that connect to the Internet and allow downloads of music, video and applications. Nintendo launched a new version of the DS. The firm sold 334,800 Wii consoles in the US in May, a 16 percent gain from a year earlier. Sales of Sony’s PlayStation 3 rose 18 percent to 154,500 units in May, while those of Microsoft Corp.’s (MSFT) Xbox 360 climbed 11 percent to 194,600 units.
• Sony Corp. and three other Japanese firms established a new firm to lay the groundwork for selling and distributing electronic books amid growing demand for digitized content. The new firm will come up with ideas for a common electronic platform for distributing digitized books, comics, magazines and newspapers via smartphones and other channels. From around October, it will start building and operating such a platform, with the distribution service targeted to begin by the end of this year. Sony, KDDI (OTC:KDDIF), Toppan and Asahi Shimbun had the establishment of the firm, in which the four have equal stakes of 25 percent. The new firm has a starting capital of 30 million yen ($342 million).
• Sanyo Electric Co. (OTC:SANYY) plans to sell its unprofitable semiconductor unit Sanyo Semiconductor Co. to US chip maker ON Semiconductor (ONNN). Sanyo is in talks with ON Semiconductor over the price of the deal and other details and aims at reaching agreement by the end of this month. The deal is expected to be worth 20-30 billion yen ($228 - $342 billion). The sale will be Sanyo's second restructuring move after it became a subsidiary of Panasonic Corp. (PC) last December, following the sale of its distribution unit. Sanyo plans to sell all shares of Sanyo Semiconductor to the US firm, while seeking to have the latter retain the workforce at the wholly owned subsidiary.
• Softbank Corp. (OTC:SFTBF) will book an additional corporate tax payment of 26.5 billion yen ($302 million) for the April-June quarter due to a payment order received by its subsidiary Yahoo (YHOO) Japan Corp. The additional tax payment will push down Softbank's net profit in the quarter by 24.8 billion yen ($282.9 million). The payment order from the Tokyo Regional Taxation Bureau relates to Yahoo Japan's acquisition of Softbank's data center and network business unit in February 2009.
• The B2C joint venture established by Chinese search engine company Baidu.com (BIDU) and Japanese e-commerce operator Rakuten (OTC:RKUNF) is scheduled to commence in-house tests and come into official operation in third quarter this year. The online mall will provide customers with high-quality merchandises produced by well-known Chinese and foreign brands as well as small- and medium-sized enterprises. Baidu and Rakuten disclosed that they will invest $50 million in the JV, with Rakuten and Baidu taking up 51 percent and 49 percent stake, respectively.
• SK Telecom Co. Ltd. (SKM) will acquire a 25.8 percent stake in Packet One Networks (Malaysia) Sdn. Bhd. for $100 million. The deal will make SK Telecom the second-largest shareholder in Packet One after Green Packet Bhd., which will own a 57.1 percent stake on completion of the exercise. The partnership will allow SK Telecom to expand its global presence while giving Packet One the capital it needs to expand its WiMAX high speed broadband network in Malaysia. The company needs 280,000 customers to break even, which it expects to occur by the fourth quarter of this year.
• LG Uplus Corp. aims to reach a profit of 1 trillion won ($816 million) by 2014 by improving its healthcare and banking. LG Uplus was renamed as it absorbed LG Dacom Corp. and LG Powercom. The firm is eyeing on 20 projects which would see its telecom services utilized in new ways. The business would help the firm to generate around 1 trillion won ($813 million) in annual sales two or three years from now. The firm had operating profit of 582.7 billion won ($474 million) in the first quarter while sales were 2.42 trillion won ($1.9 billion). The firm started reporting all its consolidated figures based on International Financial Reporting Standards, or IFRS. The firm will offer around seven to eight of smart phones this year, most of which will be running Google's (GOOG) Android operating system.
• Samsung Electronics Co. (GM:SSNLF) expects sales of its flat-screen TVs to reach 45 million to 50 million units this year, revising up its earlier target by about 20 percent on higher demand. An insufficient supply of 3D TV panels is limiting its ability to set an even more aggressive goal. Suppliers of 3D TV panels are able to meet only 80 percent of the demand from 3D TV makers such as Samsung and Sony. It will take another one or two months to resolve the shortage issue. Samsung was targeting 40 million flat-screen TV sales, including 35 million LCD TVs. Sales outlook will be limited. The firm will have common currency's weakness. Yoon's remark came as Samsung introduced a paid application store for select Web-connected TVs in South Korea and the US in a bid to make a splash in the smart TV area. Google, Sony and Intel (INTC) will cooperate with each other to improve connected TVs in coming months, stoking expectations that smart TV may be the next big wave after the smartphone's success.
• Google (GOOG) might not be able to control website in China. Google’s Internet license won’t be renewed if it keeps automatically redirecting users of the Chinese service to its Hong Kong site. Google’s dispute with the Chinese government over censorship has cost Google partnerships with China Unicom (CHU) (Hong Kong) Ltd. and Motorola (MOT) in the country. Google closed its China search engine and began directing users to the Hong Kong site.
• Taobao and Wasu Media Internet have established a joint venture called Wasu Taobao Digital Technology to launch shopping services via interactive digital television as well as a digital products platform called Taohua.com. The joint venture has been registered with a capitalization of 100 million yuan (US$14.8 million). Taohua.com will offer free and premium fee-based content that includes video, audio, e-books, educational materials and interactive entertainment. It is expected to offer a selection of 4,000 motion pictures and 20,000 popular television show episodes at launch. The platform will gradually introduce e-books, music and other digital products. Content providers for Taohua.com include Joy.com and Wasu. The Wasu Television Taobao Mall will initially have twelve main product categories including household goods, consumer electronics, and apparel.
• Baidu (BIDU) is looking to hire 30 software engineers from the US next month to help make the company more innovative as it seeks to take advantage of rival Google Inc.'s shrinking participation in China. Baidu will gain market share in China from Google as the Chinese government objects to Google's recent strategy of redirecting Chinese users to an uncensored site in Hong Kong and threatened Google with the loss of its license. Kaiser Kuo will hold a job fair in Milpitas, Calif., and is aiming to hire mid-level to senior engineers. Baidu's hiring in the US market underscores the need for more experienced engineers in China. Analysts say having insufficient number of engineers means companies will fall behind other rivals as competition intensifies in the Internet space.
• The Internet Corporation for Assigned Names and Numbers (Icann) has approved a set of Chinese language internationalized domain names. Millions of Chinese language users will soon be able to access the internet using Chinese script. The new IDN country code top-level domains and the associated organizations approved include CNNIC (China Internet Network Information Centre), HKIRC (Hong Kong Internet Registration Corporation Limited) and TWNIC (Taiwan Network Information Centre). The Icann board has also allowed the application for the .xxx top-level domain (TLD) to move forward. The ICM registry applied for the .XXX sponsored top-level domain as a potential community site for the adult entertainment industry. Icann has adopted the next steps for the application, including expedited due diligence, negotiations on a draft registry agreement, and consultation with Icann's Governmental Advisory Committee.
• China's telecom companies will be constructing manufacturing facilities in India in partnership with local firms. The government asked operators to acquire security clearance before buying any key telecom gear from foreign firms. The Department of Telecom (DoT) spread that the telecom companies need to meet with regard to security issues, and has asked the industry to give their views on the same. Telecom companies hopes that import of equipment from foreign suppliers will be permitted only after an International Certification Agency visits the vendor's plant and gives a security clearance.
• Public Mobile and ZTE (OTC:ZTCOF) cooperated with the Export-Import Bank of China and will receive $350 million in financing to help build a wireless network from Windsor to Quebec City. The partnership with Public Mobile is ZTE’s first end-to-end wireless network project in Canada. Public Mobile is launching a CDMA network using frequencies auctioned by Canada in 2008. Service started in Toronto in May and is due to start in Montreal in late June. The company is backed by US investors including Columbia Capital and M/C Venture Partners as well as the Ontario Municipal Employees Retirement Systems. Canada normally bans foreign investment in telecoms operators. The vendor financing arrangement provides support for the network build using equipment and services provided by ZTE and its Canadian subsidiary. The financing arrangement is backed by export credit insurance from the China Export and Credit Insurance.
• China PTAC Communications Services Co. Ltd. had a deal worth 700 million yuan ($103.04 million) with Huawei Technologies Co. Ltd. to acquire 2.3 million handsets. The contract includes the purchase of the low-end C5900, C5110, and C2823 handset models priced between 300 yuan ($44.16) and 1,000 yuan ($147.2). Two of the models, the C5900 and C5110, are 3G handsets. PTAC have at least 30 percent of the domestic market for telecom equipment distribution. Low-end to mid-range 3G handsets will be demanded form the Chinese market as it is currently saturated with high-end products.
• ZTE Corp. (OTC:ZTCOF) maintained the leading position in China in the CDMA market in the first half of this year with the market share increasing to 43.2 percent, said Li Jian, general manager of ZTE's CDMA and LTE products. ZTE has undertaken Nortel's CDMA equipment transfer work in 12 out of 14 prefecture-level cities, which expanded its CDMA market share. ZTE attaches great importance for the development of CDMA market, and keeps large-scale investment in CDMA technologies. The telecom equipment producers took the lead in completing the EV-DO Rev. B outfield commercial test in April in Chengdu. Besides, ZTE is the first firm in the industry to roll out CDMA/LTE dual-mode remote radio unit (RRU), and the CDMA/LTE integrated solutions, capable of upgrading to future's networks smoothly, and evolving to LTE with the fastest speed in business deployment.
• AsiaInfo Holdings Inc (ASIA) confirmed the completion of its merger with Linkage Technologies International Holdings Limited (BOSS). The two companies have joined together to form AsiaInfo-Linkage Inc. Under the terms of the merger agreement Linkage shareholders received $60 million in cash plus approximately 26.8 million AsiaInfo shares. AsiaInfo-Linkage will have an expanded service offering, stronger R&D capacity and complementary customer bases for cross-selling opportunities.
• All three of China's telecom operators garnered a total of 9.58 million mobile-phone users in the month, which accelerated the mobile-phone users to 776 million. China Unicom (CHU) adopted an aggressive marketing strategy and accomplished the fastest growth in cell-phone service subscribers in May, and its 3G user base broke 1 million. Mobile service subscribers signed up by China's largest telecom operator in terms of revenue. China Mobile (CHL) had rapid and stable progress. The telecom giant gained 917,000 3G subscribers to its service. China Telecom recruited 3.02 million new cell-phone users in May, broadly the same as the 3.03 million net addition in April, and in accord with its expectations of gaining about 3 million users each month. Industrial insiders said that China Telecom focused more on attracting ordinary users to customers of higher average revenue per user.
• China added 40.8 million phone users during the Jan.-May period, bringing the nationwide total to more than 1.1 billion in a country with a 1.3 billion population. Fixed-line telephone users decelerated by 7.8 million to 306 million while mobile phone users jumped 48.5 million to 796 million. The telecommunications industry had about 1.23 trillion yuan (US$181 billion) of business income in the five-month period, up 21.6 percent year on year.
• China Telecom (CHA) had 16.97 million CDMA terminals sold at home in the first five months of this year. Such a robust sale pushed the company's market share up four percentage points from the comparable period of 2009 to 21 percent. The growth in CDMA terminal sales drove the telecom market up by 8.4 percentage points in the January-May period. The company sets a goal to sell over 50 million CDMA mobile phones in the entire 2010, of which 10 million-plus are medium priced. 146 models of CDMA terminals are rolled out in the market, making up 24 of the total newly-launched products in the country. More than 800 models of CDMA terminals under 111 brands are available in the market now, of which 581 are CDMA 1X terminals, 143 are EVDO products, 45 are data cards, and 17 are netbooks and MIDs.
Media, Entertainment and Gaming
· Shanda Games Ltd. (GAME) launched Mochi China, a Chinese version of an online games network originally developed by Mochi Media Inc. Mochi China is located at zh-cn.mochimedia.com. Mochi Media had over 35 million active subscribers in China before the launch of the Chinese site. Shanda Games acquired Mochi Media Inc. for $80 million in January 2010, Interfax previously reported. Mochi Media provides a platform to distribute games from developers to other Web sites including blogs and social networking sites. It also provides tools for advertising and sales of virtual items. The launch of Mochi China gives domestic Flash game developers a new platform for distribution, allows advertisements to be included in games and revenues generated to be easily monitored. It also gives Chinese game developers an international platform and a potential revenue stream from abroad.
· China Xinhua News Network Corporation (CNC) will speed up expansion in the fast-growing new media market to profit from the 3G era. CNC will capitalize on the opportunities arising from the evolution of global news media into mobile and interactive new media to turn into an integrated operator of traditional and new media networks. The firm launches an English-language TV channel, a move that makes the TV service structure of Xinhua News Agency clear. The great potential of personal computers (PCs) and mobile phones to grow into the new carrier of TV programs is emerging, although a majority of the people watch TV programs on TV. China is the world's biggest TV, PC, and mobile phone market, with 253 million Internet users and over 600 million mobile phone users.
• TCL Corp. will garner 210 million yuan ($31 million) in subsidies from the government of the southern Chinese city of Shenzhen. The electronics company’s units have already gotten 341.8 million yuan ($50.5 million) of subsidies from the Shenzhen government.
• Lenovo Group (OTC:LNVGY) aims to sell 1 million units of its self-developed smartphone in the China market this year. The phone, called Lephone, is based on Google's Android operating system. It was showcased at a mobile fair in January this year. The firm thinks that the phone will be a great shot. It was cooperating with developers to come up with applications to target that market. Mobile Internet products would account for 10-20 percent of revenue in five years.
• Yingli Green Energy Holding Co. (YGE) aims to triple solar panel production capacity in the next three years to 3 gigawatts a year at a total cost of roughly 200 billion yen ($2.3 billion). The firm is spending some 130 billion yen over three years to construct a large production facility on Hainan Island. The site's No. 1 plant was recently completed and will begin operations in the near future. It will have an annual production capacity of 100mw. A plant with a capacity of 200mw a year will also be built. A new plant will be added to an existing one in Hebei Province. The new facility will come onstream in 2012 with 300mw of capacity, with the possibility of expanding to 800mw as domestic and foreign demand warrant. The firm's investment will likely come to 40-80 billion yen ($5.9 billion- $11.8 billion). Yingli is also looking at building a 100mw-per-year panel plant in the southwestern US at a cost of 5 billion yen ($57 billion).
Disclosure: No positions