Japanese Tech Stock Weekly Summary

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

Media, Entertainment and Gaming

• Cable broadcaster Usen Corp announced its move to raise 25 billion yen (US$210.4 million) by allotting some 24.5 million new shares to a Goldman Sachs group company to finance the repayment of loans. The new share issue, with payment due on May 11, is expected to turn the Tokyo-based company of the major U.S. brokerage house group, called GSTK Holdings 2, into the second largest shareholder in Usen with a stake of 18 percent, with Usen President Yasuhide Uno holding a stake of 44.5 percent.

• Industry sources said business tie-up negotiations between Rakuten Inc and Tokyo Broadcasting System Inc have become problematic, with Rakuten telling TBS that it will seek to turn the broadcaster into an equity-valued affiliate by raising its 19.8 percent stake to "a little more than 20 percent." Sources also said that Rakuten proposed that TBS accept Rakuten President Hiroshi Mikitani and Muneaki Masuda, president of Culture Convenience Club Co and an external director of Rakuten, as outside members of its board.

• According to study conducted by Dentsu Communication Institute Inc., domestic spending on online advertising will more than double by 2011, with the intensifying competition with other advertising media, especially newspapers and TV. The report said spending on Internet advertising would grow to 755.8 billion yen (US$6.3 billion) in 2011 from 363 billion yen (US$3 billion) in 2006. Dentsu forecasts that advertising expenditures are going to post an annual average growth of 15.8 percent during the five years through 2011. According to the forecasts, fixed Internet ads, including banner ads, streaming video ads posted on web sites, and ads sent to registered e-mail addresses, will account for 400.9 billion yen (US$3.3 billion), which stands for more than half the total online advertising in 2011. Advertising based on search engines are forecast to account for 226.5 billion yen (US$2 billion), or nearly 30 percent, of the 755.8 billion yen (US$6.3 billion). About 17phones in 2011, more than triple the 39 billion yen (US$328.5 million) in 2006.

• Industry sources are looking to the move to revise the Broadcast Law, paving the way for NHK to provide past TV programs for a fee through Internet broadband telecommunications systems. The new development is expected to ensure a new revenue source for the public broadcasting now facing some financial problems. At present, NHK delivers programs through the Internet on a limited scale as a "supplementary broadcasting business." Many of them are educational programs while others include those on welfare, science and news programs. In addition to the secondary use of programs, NHK provides program-related information. The broadcaster looks to about 176 such programs for the current fiscal year to be made all accessible free of charge from NHK's web site.

Hardware

• U.S. recording disk and tape maker Imation Corp. (IMN) announced its plan to acquire Tokyo based TDK Corp.'s (TDK) brand and sales operations in recording media in a deal valued at US$300 million in stock and cash. Under the deal, Imation would gain the TDK brand, the world's No. 2 brand in optical disks in a price-competitive market, while TDK is set to become lead shareholder in Imation through the deal, slated for completion in the July-September quarter. Industry observers also see the deal as helping TDK streamline its recording media business. TDK would sell its shares in six sales units as well as assets at three other units. The deal would affect roughly 400 TDK employees. According to its official, the sale would allow TDK to focus on developing and making audiotapes and optical devices such as Blu-ray discs, which the company would continue to supply to Imation and other companies.

• Fujitsu Ltd (FJTSY.PK) and Sun Microsystems (SUNW) announced unveiling a new line-up of co-developed servers that is expected to reshaping the computing market by delivering mainframe-class reliability with open systems advantages. Fujitsu said the new servers, based on the SPARC architecture and running the Solaris 10 operating system [OS], are the fastest SPARC servers ever, and will be marketed by both companies and affiliates under the SPARC Enterprise product brand. The new servers address the growing customer need to maximize system utilization by offering an array of highly granular partitioning and domaining technologies.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.