Japanese Tech Stock Weekly Summary

by: IRG Ltd

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


Market sources indicated that Softbank Corp. (OTCPK:SFTBF) is looking to TV broadcasting as its next area of expansion. The decision brings Softbank into the fold with other companies in the country looking to deliver content via the Internet. According to Softbank’s top official, a service integrating Internet content and on-demand video with live terrestrial television programming could be a logical step for the company.

MySpace (NASDAQ:NWS), the highly popular social networking site, launched a video sharing service on its Japanese web site. The move is seen as directly competing against domestic rivals as well as YouTube. With the service, MySpace Japan follows Japan's popular social services network Mixi, which allows members to upload an unlimited number of their own videos on the Internet. MySpace entered the Japanese market in November with a joint venture between News Corp and Japanese Internet giant Softbank Corp, hoping to entice customers away from Mixi.

Media, Entertainment and Gaming

TV Tokyo Corp. said it has adopted a package of measures to defend itself against hostile takeover bids, with the company saying the measures are aimed at enhancing TV Tokyo's corporate value and shareholder benefits. An independent panel of three or more people will decide when TV Tokyo should consider a bid hostile and activate the defensive measures, which include a poison pill that issues equity warrants to dilute a buyer's target stake. Any buyer that wants 20 percent or more of the broadcaster will have to give the panel a report on the reasons for acquiring the stake.

According to Rakuten Inc. president, Hiroshi Mikitani, he will not limit his acquisition goal for shares of Tokyo Broadcasting System Inc. [TBS] to 20 percent. The official said he aims to raise Rakuten's stake to above 20 percent from the current 19.8 percent at present to make thebroadcaster an equity-valued affiliate of Rakuten, which means that TBS earnings would be incorporated into Rakuten's income in proportion to the size of its equity investment. According to sources, TBS suspects Rakuten is aiming for a higher stake so it can take over the broadcaster. Earlier in April, Rakuten announced that it would raise its stake in TBS to "a little more than" 20 percent.


• Cyber Com Co., a Japanese developer of telecommunication-related software, announced that it has received approval to list on the JASDAQ Securities Exchange on June 19.
The company will offer 450,000 shares to the public in its initial public offering. Of those, 350,000 are newly issued shares and 100,000 are shares currently held in private. The company said it will offer all the shares through the book-building method, with Cyber Com looking to generate some 635 million yen (US$5.2 million) from the IPO. For the current fiscal year through March 2008, the company forecasts a parent pretax profit of 647 million yen (US$5.3 million), net profit of 372 million yen (US$3 million), and revenue of 9.4 billion yen (US$77.7 million). Daiwa Securities SMBC is the lead underwriter of the offer.

Canon (NYSE:CAJ) Marketing Japan announced plans for a US$129 million tender offer for Argo 21 Corp. in a bid to boost its IT solutions business. Argo 21 is a mid-sized system integrator, which develops computer software and systems. Under the plan, Canon Marketing, owned 65 percent by Canon, said that it would offer 1,400 yen (US$11.5) per Argo 21 share. Canon Marketing said it looks to securing at least 54.2 percent of Argo 21 Corp., although it intends to accept all shares tendered, with the company offering a maximum bid value of 15.5 billion yen (US$128.1 million). In 2006, Canon Marketing set its mid-term business targets at 1.1 trillion yen (US$9 billion) in revenues. For its IT solutions business, Canon Marketing said it forecasts 300 billion yen (US$2.4 billion) in sales.

Nippon Ichi Software Inc., a Japanese developer of game software, said it has secured approval to list on the JASDAQ Securities Exchange on June 13. The company will offer 3,600 shares to the public in its initial public offering. Of those, 2,000 are newly issued shares and 1,600 are shares currently held in private. An additional offering of 540 existing shares is expected under an over allotment arrangement in the event of exceptional demand. The company will offer all the shares through the book-building method. The company said it expects to generate 385 million yen (US$3.1 million) from the IPO. For the current fiscal year through March 2007, the company forecasted a group pretax profit of 452 million yen (US$3.7 million), net profit of 270 million yen (US$2.2 million), and sales of 2.2 billion yen (US$18.1 million). Daiwa Securities SMBC is the lead underwriter of the offer.


Sony Corp. (NYSE:SNE) disclosed a 68 percent decline in its operating profit to 71.8 billion yen (US$596.5 million) for the year ended March 31, with the company ascribing the results to factors such as large losses from its game segment. The company posted an 11 percent rise in sales to a record 8.2 trillion yen (US$67.5 billion). The company also attributed the rise in sales to the performance of its PlayStation 3 console even as increasing development expenses resulted in a loss of more than 200 billion yen (US$1.6 billion) for the game segment. Sony said its net profit climbed 2 percent to 126.3 billion yen (US$1 billion), attributing the results in part to the strong earnings performance of equitymethod affiliate Sony Ericsson Mobile Communications AB.

• According to asset management company Sparx Group, Pentax Corp., a precision instrument maker, is prepared to accept a proposal to merge with glass and lens maker Hoya Corp. (OTCPK:HOCPY) The proposal is seen as part of the takeover plan of Hoya. As a condition of accepting the takeover, Pentaxis demanding a guarantee of management independence and the removal from the board of directors of former senior managing director Katsuo Mori and former president Fumio Urano, who had spearheaded the merger talks with Hoya.


Fujitsu Ltd (OTCPK:FJTSY) announced that it has secured a contract for the upgrade of the Japan-U.S. Cable Network, a submarine fiber-optic cable system, with a consortium representing seven telecommunication carriers, including AT&T Corp (NYSE:T), KDDI Corp, NTT Communications Corp, Qwest Communications International Inc (NYSE:Q), Reach Global Networks Ltd, Softbank Telecom Corp, and Verizon (NYSE:VZ) Business. Under the contract, Fujitsu's FLASHWAVE S650 submarine line terminal equipment will be implemented at three landing points each in Japan and the U.S. The FLASHWAVE S650 series is capable of providing a significant capacity upgrade to existing systems, more than doubling the original design capacity of 640Gbps of the Japan-US Cable Network beyond 1.28Tbps. The equipment was selected for its compact size, multiplex transmission capability, low power consumption and high reliability.

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