Japanese Tech Stock Weekly Report

by: IRG Ltd

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


Yahoo Japan Corp announced its decision to increase its stake in Internet food delivery firm, Yumenomachi Souzou-Iinkai, in a bid to expand its food-related business. The company said it will be buying 3,200 shares at 401,190 yen each (US$3,313), via a tender offer. Yumenomachi Souzou- Iinkai is listed on the Osaka Securities Exchange's Hercules board.

Industry sources said that Mitsubishi UFJ Financial Group (NYSE:MTU), Japan's biggest bank, has plans to increase its stake in online brokerage affiliate kabu.com Securities Co. through a tender offer. Some sources said Japan’s biggest bank is looking to getting more control of the brokerage firm, with other reports claiming that the bank intends to raise its stake to around 40 percent from the 30 percent it currently holds. According to an MUFG spokesman, the company has not decided on anything. The company said it was targeting a group net profit of 1.1 trillion yen (US$9.1 billion) in the business year to March 2010, up 26 percent from a forecast 870 billion yen (US$7.1 billion) this year.


eMobile Ltd. announced that it will launch fixed-rate broadband wireless services next month and put its keyboard-equipped handset into the bargain. With the move, eMobile, a wholly owned subsidiary of broadband service operator eAccess Ltd., will be the first new company to tap into Japan's increasingly competitive wireless market in 13 years. The new Em-One handset was developed with Sharp Corp. and Microsoft Corp. The company said eMobile's services would begin March 31, within Tokyo's 23 wards, central parts of Nagoya, Osaka and Kyoto, with the monthly fixed-rate basic charge placed at 5,980 yen (US$49). Under the offering, a two-year contract that includes the price of the handset is valued at 39,800 yen (US$329).

I-Freek Co., a provider of mobile phone services, announced that it has received approval to list on the Osaka Securities Exchange's Hercules market on March 19. The company said it will offer 3,800 shares in its IPO. Of those, 2,500 are newly issued shares and 1,300 are currently held privately. The company said it will offer all the shares through the book-building method. In the last fiscal year ended March 2006, the company posted a parent pretax profit of 142.8 million yen (US$1.1 million), net profit of 80.6 million yen (US$665,000), and revenue of 448.8 million yen (US$3.7 million). Mitsubishi UFJ Securities is the lead underwriter of the offer.

On2 Technologies, Inc. (ONT), a leader in video-compression software and solutions, announced that it is increasing its presence in the Japanese video market with the appointment of Marubeni Solutions Corp. as its reseller and development partner. Under this agreement, Marubeni Solutions will provide a sales channel for On2 Flix Engine and Publisher product line to media companies, publishers and enterprises for Internet portals and social networking sites using Flash video. The arrangement is expected to give On2 access to Marubeni Solutions' customer base representing large media companies and leading device manufacturers in the digital camera and mobile handset industries through its sales force and engineering teams. On2 Technologies is a leading technology firm at the forefront of digital video compression. MSOL is a leader in the introduction of advanced technology products into Japan and Asia from all over the world.

Media, Entertainment and Gaming

Tomy Co., a Japanese toy maker, disclosed that it was slashing its annual net profit forecast by two-thirds, with the company ascribing its move to weak demand for toys. Tomy stated that consumers had spent more on Nintendo Co.'s new video game players. Tomy said it now expects to post a group net profit of 1.7 billion yen (US$14 million) in the year to March, down from its previous forecast of a 5 billion yen (US$41.2 million) profit. The company retained its sales forecast at 170 billion yen (US$1.4 billion), indicating the strong performance of the unit that wholesales Nintendo products, a business that generates lower margins than its core toy business.

According to data from Media Create Co. Ltd, the launch of Sega Corp.'s Virtual Fighter 5 for the PlayStation 3 was the reason for the console’s biggest hit of the year. The title launched on Feb. 8 topped the Japan software charts for that week with sales of almost 50,000 copies, with the company ascribing to the launch the jump in sales of the console during the week of Feb. 5, to 23,431 units from 18,727 units in the previous week. The report said sales of Nintendo Co. Ltd.'s Wii also jumped to 78,550 units for the week, according to the estimates. Nintendo's handheld DS Lite device remained on top of the hardware sales ranking at 201,770 units. Sony Computer Entertainment Inc.’s PlayStation Portable posted sales of 32,175 units, according to Media Create. Software titles for new- generation consoles occupied the top three positions for the week. Following Virtual Fighter 5 at number one were Wii Sports and Wii Play in second and third place, respectively. Media Create receives actual sales data from around 3,000 stores across Japan and uses that to estimate nationwide sales.

Several sources are reporting that Intel Capital and Yoshimoto Kogyo have bought a small stake in Faith Inc., a Kyoto-based content service provider for mobile devices and Internet. Earlier last week, Faith's U.S. arm Moderati was sold to Bellrock Media. According to their statement, the U.S. subsidiary is losing money and plagued with problems, including a postponed trial launch of its Mobile Virtual Network Operator [MVNO] service and heavy capital requirements. Intel Capital is a company that aims at investing and supporting profitable enterprises that will drive Internet growth, enable new usage models, and advance industry standards. Yoshimoto Kogyo Co., Ltd. describes its major aim as providing entertainment programs, with its operations carried out through the following divisions: production (comedies, theatrical, live show and distribution of television/radio programs); real estate (real estate rental and leasing); and management of restaurants and cruise liners, as well as sale of sundry goods.

According to sales bulletin from analyst firm NPD, Nintendo's (OTCPK:NTDOY) Wii game console outsold its competitors in January, even as it maintains its lead against rivals Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT). Nintendo sold 436,000 units during the month, with Sony's previous iteration of its console, the PlayStation 2, coming in second place. Microsoft's Xbox 360 was third, followed by the PlayStation 3. Nintendo has maintained its lead primarily through ease-of-use, a lower price, and strong game titles at launch time, analysts have said. Sony and Microsoft, in contrast, have tried to develop consoles that are cutting edge, which has increased the price of the units.


TDK Corp. (TDK), the world's largest maker of magnetic tapes, revealed its decision to go into a capital tie-up with Tabuchi Electric Co. next month in a bid to enhance its electronic component business. Under the agreement, TDK said it will acquire a 14.2 percent stake in Tabuchi, a leading maker of high-voltage transformers and power supplies, through a third-party allocation of new shares, with TDK spending 810 million yen (US$6.6 million) to acquire 5 million new shares in Osaka-based Tabuchi. After the acquisition, TDK is expected to become Tabuchi's biggest shareholder.