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Japan

Hardware

Hewlett-Packard (HPQ) Japan Ltd. has been ordered to pay around 23 billion yen in additional tax for its alleged failure to declare about 47 billion yen ($544.8 million) in taxable income in Japan over two years through October 2006. The Japanese unit of the US computer maker has apparently challenged the claim. The Tokyo Regional Taxation Bureau concluded that the roughly 47 billion yen ($544.8 million) that the Japanese subsidiary logged as expenses paid to its US parent were not deductible, saying it was not evident for what services the amount had been paid.

Mobile/ Wireless

Domestic shipments of mobile phones, including PHS handsets, totaled 17.24 million units in the January-June period, according to the Japan Electronics and Information Technology Industries Association. The figure is a 5 percent increase from the same period the previous year, when the economic downturn slammed sales. The large number of new models introduced this spring helped boost shipments. The half-year figure is still only 66 percent of that for the January-June period of 2008. A major reason for the decline is that carriers have stopped providing sales incentives, sending handset prices higher and therefore cooling replacement demand. June shipments fell 5 percent on the year to 3.75 million phones, for the first slide in three months.

Media, Entertainment and Gaming

US Web 2.0-based social network game developer Zynga has acquired Unoh, one of Japan’s leading social games companies. Unoh will be part of the foundation of Zynga Japan’s mobile product efforts, which will be a joint venture between SoftBank Group and Zynga, accelerating Zynga Japan’s entry into the Japanese social gaming market. Unoh is one of Japan’s pioneering social game companies, founded in 2001, with top hits Machitsuku!, Band Yarouyo!, and Kaizoku Chronicle. In addition to maintaining Unoh’s games on mixi, Mobage-town, and GREE, Zynga Japan will also localize Zynga games and develop new games targeted at the Japanese market.

Telecommunications

Japanese mobile operators added 557,900 new subscribers in July to reach a total of 114.27 million mobile subscribers, figures from the Telecommunications Carrier Association (TCA) show. Softbank (OTCPK:SFTBF) again led in subscriber additions in July as it added 279,500 new customers to bring its total to 22.852 million. NTT Docomo (DCM) gained 145,100 new subscribers to reach a total of 56.659 million, while Emobile won 81,500 new customers to end July with a total of 2.618 million customers. KDDI (OTC:KDDIF) ended the month with 32.143 million subscribers after adding 51,800 new customers. Troubled PHS provider Willcom shed 46,900 customers, which brings the company's total to 3.835 million. Willcom has filed for bankruptcy and has begun a rehabilitation process.

Internet Initiative Japan's (IIJI) fiscal first-quarter revenues ending June 2010 was nearly flat at 15.81 billion yen ($183.3 million). Connectivity and outsourcing services revenue grew 2 percent and gross margin for this segment was up 1.6 percent to 17.8 percent. SI revenues fell 4.7 percent and gross margin fell 2.3 percent to 23.4 percent. Equipment sales grew 5.7 percent and its gross margin grew was up 4.5 percent to 17.4 percent. Net profit grew 36.8 percent. The company expects connectivity and outsourcing services to grow as demands for bandwidth and outsourcing are anticipated and demands for cloud computing are growing. IIJ aims to complete the transaction to acquire AT&T (T) Japan on 1 September.

NTT DoCoMo, Inc. is rumored to invest an additional US$1,000 million in Tata Teleservices Limited (TTSL). The transaction might give NTT DoCoMo, which currently owns a 26 percent stake in TTSL, an additional 10 percent to 15 percent in TTSL. While part of the stake may be acquired by infusing funds in TTSL, Tata Group companies could sell part of their holding to NTT DoCoMo.

Japan's NTT Data Corp. has acquired all outstanding shares in UK system engineering company Chelford SAP Solutions Ltd. The cost of the purchase, made via German subsidiary itelligence AG, has not been disclosed. Chelford generated roughly 10 million pounds ($15.9 million) in sales for the year ended Dec. 31, 2009, and employs about 60. It caters mainly to midsize companies in the wholesale, retail and consumer goods businesses, installing enterprise resource planning systems from German software company SAP AG (SAP). NTT Data will integrate Chelford with the UK operation of intelligence, which offers SAP software mainly to manufacturers, as part of efforts to expand in Europe.

KDDI is investing 448 million yen ($5.2 million) in augmented reality company Tonchidot by subscribing for an allocation of new shares by Tonchidot. KDDI and Tonchidot have cooperated in several innovative business initiatives in Augmented Reality (AR) for smartphones and mobile phones. Through this investment, KDDI and Tonchidot intend to further strengthen the cooperative relationship to expand Sekai Camera's user base among smartphone and mobile phone users. Plans include billing games utilizing KDDI's mobile billing platform and collaboration in building an advertisement business. The two companies also plan to create new services by leveraging KDDI's ability to procure various content, and by utilizing KDDI group's knowledge in research and development in augmented reality. Tonchidot launched Sekai Camera in 2009 and KDDI launched the Android version of Sekai Camera, an augmented reality application. In July the company launched Sekai Camera Zoom for au mobile phones.

Korea

Telecommunications

KT (KT), the country’s largest fixed-line operator and second-largest mobile carrier, announced that it will be lending out its networks to three “mobile virtual network operators,” shortly after that type of telecommunications firm was legalized. Korea’s National Assembly passed a bill early this year to allow MVNOs to enter the telecom market in efforts to lower barriers to entry and increase competition in the country’s highly saturated telecom market, which has so far been dominated by three companies: SK Telecom (SKM), KT and LG U+, in order of market share. With the move, KT becomes the first of the three to deal with an MVNO. KT will lend its networks to three companies: Entaz, which will offer a mobile portal service with games, cartoons and electronic books, Free Telecom and Evergreen Mobile, which will offer prepaid voice call and data usage services targeting temporary customers such as foreign visitors.

Hynix Semiconductor planned to invest 677.0 billion won ($572.7 million) to expand an existing facility. Hynix would spend the money to upgrade the facility as well as on research and development.

>> Continue to Part II: China

Disclosure: No positions

Source: Asian Tech Stock Weekly Review (August 9 – 15), Part I