Japanese Tech Stock Weekly Summary

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

Mobile/Wireless

• Following Vodafone Group’s (VOD) agreement to acquire a controlling stake in Hutchison Essar, NTT DoCoMo (DCM) announced that it has revoked a license given to the Indian operator. According to the company, this is the first time it has cancelled an i-mode contract even as it is already considering other options to provide i-mode in India. DoCoMo initiated i-mode in 1999, which enables users to surf the Internet, send e-mail and download games.

Internet

• According to the Tokyo Stock Exchange, Carview Corp., an automobile information web site operator received approval to list on the Tokyo Stock Exchange's Mothers market. The company will offer 6,050 shares to the public in its IPO. Of those, 2,500 are newly issued shares and 3,550 are shares currently held in private. The company will offer all the shares through the bookbuilding method. The company said it expects to net 3.4 billion yen (US$28.2 million) from the IPO. For the current fiscal year through March 2008, the company forecasts a group pretax profit of 1 billion yen (US$8.3 million), net profit of 594 million yen (US$5 million), and revenue of 5.8 billion yen (US$48.2 million). Shinko Securities is the lead underwriter of the offer.

Software

• Vivisimo, a leading provider of enterprise search software and expertise, announced the addition of several new customers last quarter, including Basic Inc., the University of Tokyo, and an FT Global 500 pharmaceutical company, who join existing customers such as Bitratings, Carview Corporation, Kadokawa Cross Media, and Suginami-ku Parenting Site. In 2006, Vivisimo signed a reseller agreement with Groupnet Corp. in Tokyo, and the recent customer growth is indicative of the universal need for high-performance search solutions across a wide range of markets. Customers in Japan are using Vivisimo Velocity to strengthen their online brand through enhanced web site search capabilities and improve information worker knowledge. The Vivisimo Velocity platform provides enterprises with innovative search solutions that allow users to access, extract, and manipulate all available content, regardless of location. Vivisimo does search by combining the simplicity and innovation of consumer search with the flexibility and control of enterprise software. Vivisimo serves its global client base through its headquarters in Pittsburgh, PA, and Paris, France, as well as partners throughout the world.

• The Japanese government wants to go open source, as a way to rely less on a single vendor IT software infrastructure. Among the 10 vendors waiting in line to help make this possible are Oracle (ORCL), NEC (NEC), IBM (IBM), HP (HPQ), Hitachi (HIT) and Dell (DELL). Industry sources said these IT equipment and software vendors are forming a consortium to develop and sell Linux-based servers and computers for the Japanese market. The move by the vendors to collaborate on Linux in Japan comes from an announcement from the country's government to make Linux an open source a priority for all IT procurements, starting this July. The central government of Japan says it plans to spend approximately 1.2 trillion yen,(US$10.4 billion) on IT over the next year. The government has said explicitly it wants to decrease its reliance on Microsoft as a server operating system platform. Analysts note the absence of any major Linux operating system distributor as part of the announcement.

• According to Tokyo Stock Exchange, NTT Data Intramart Corp., a Japanese developer of software for web-based system development has received approval to list on the Tokyo Stock Exchange's Mothers market. The company will offer 4,500 shares to the public in its IPO. Of those, 3,200 are newly issued shares, with the remaining 1,300 are shares currently held in private, including 700 shares to be offered by NTT Data Corp. The company will offer all the shares through the book-building method. The company said it expects to net 577.2 million yen (US$4.8 million) from the IPO. For the current fiscal year through March 2008, the company forecasts a parent pretax profit of 300 million yen (US$2.4 million), net profit of 169 million yen (US$1.4 million), and revenue of 2.5 billion yen (US$20.7 million). Daiwa Securities SMBC, the lead underwriter of the offer, has an option to offer additional 675 shares in the event of exceptional demand.

Hardware

• Toshiba (TOSBF.PK) is reportedly opening a development center next month in Hanoi, Vietnam. The Toshiba Software Development (Vietnam) will focus on the development of embedded software for consumer electronics products. The center's low-level software processes will be combined with upper processes from Japan designers to develop the embedded software used in the company's digital consumer electronics products and cell phones. According to Toshiba, the Vietnam center is part of its goal to increase software development work over the medium term while not concentrating resources in any one country. The company also has software development centers in India and China.

• Funai Electric (FUAIY.PK) revealed its decision to leave the PDP (plasma display panel) TV market, a move the company ascribed to sharply falling ASP (average selling price) and rising competition from vendors. Funai offers 42-inch PDP TVs in North America with panels sourcing from LG Electronics (LGE), with the TVs manufactured in Malaysia. The company said its sales volume from its PDP TVs in North America could not go beyond 100,000 units in 2006. In the future, the company said it will focus on LCD TV business and said it is also planning to seek for more LCD TV OEM orders. In a related development, Funai announced that its new LCD TV plant in Poland will commence operation next month with monthly capacity of 200,000 units. The company looks to the new plant as helping the company shorten lead-time, reduce the inventory level of finished goods and lower tariffs. Funai shipped about 600,000 LCD TVs in fiscal year 2005, and it is aiming for LCD TV shipments of 1.8 million units worldwide in fiscal year 2006. It holds a 1.2 percent stake in Chi Mei Optoelectronics (CMO) and about 90 percent of Funai's LCD TVs use panels from CMO. Earlier in March, Royal Philips Electronics announced it has decided to phase out of the PDP TV market and focus on LCD TVs in the future. In 2005, Sony also decided to drop out of the PDP TV sector.

Telecommunications

• Nippon Telegraph & Telephone Corp. (NTT), Japan's largest phone company, reported a 4.4 percent drop in its annual net income to 476.9 billion yen (US$4 billion), with the company ascribing the decline to its wireless unit NTT DoCoMo Inc. having spent more on mobile phone subsidies. The company said sales posted a 0.2 percent growth to 10.7 trillion yen (US$89 billion). DoCoMo, which controls 54 percent of Japan's mobile-phone market, contributes about 45 percent of NTT's revenue. To reduce dependency on its wireless unit, former government monopoly NTT announced that it is building a 3 trillion-yen (US$25 billion) fiber-optic network nationwide that is expected to enable movie providers and wireless operators to transfer data such as videos and songs via simpler and cheaper means. Earlier, DoCoMo said payments for handset subsidies went up 4.2 percent to 1.8 trillion yen (US$15 billion) in the year ended March 31. NTT's annual operating profit also went down by 7 percent to 1.1 trillion yen (US$9.1 billion). The company forecasted net income to drop to 460 billion yen (US$3.8 billion) and sales to 10.7 trillion yen (US$89 billion) for the 12 months ending March 31, 2008, with operating profit estimated to remain flat at 1.1 trillion yen (US$9.1 billion). NTT revealed plans to pay a dividend of 9,000 yen (US$74.8) a share this fiscal year, rising from 8,000 yen (US$66.5) a share for the 12 months just ended.

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