Japanese Tech Stock Weekly Summary

by: IRG Ltd

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

Media, Entertainment and Gaming
GDH K.K. announced that its group company GONZO Rosso K.K. has closed a game licensing deal with SONOV Corporation to provide SONOV’s online game Shaiya-Light and Darkness, a popular MMORPG featuring extensive player-versus-player combat, in Japan. Following its successful launch in Korea in 2004, the game is now available in China and Vietnam, and has also been licensed for release in the U.S. Shaiya recorded 300,000 simultaneous users immediately after launch of its open beta service in China. GONZO Rosso also revealed plans to launch full service of Shaiya after a closed beta service scheduled to start from this September. SONOV was set up with the aim of becoming the prominent worldwide provider of digital content and is specialized in global online entertainment. GDH is a Japanese media company founded in February 2000. The group produces cutting edge entertainment for teens and young adults through its GONZO animation brand.

Media sources said Softbank Corp. (OTCPK:SFTBF) is launching an Internet Protocol [IP] phone service using a fiber-optic network in August. The move is seen as a strategy to attract clients away from rivals Nippon Telegraph and Telephone Corp. (NYSE:NTT). Under the offering, Softbank subscribers will be able to make calls for free after a small monthly charge. The subscribers will include the 5 million under its BB Phone IP phone service. The reports said Softbank sees the IP phone service over both ASDL and fiber-optic networks as the service that will make it a strong competitor against NTT. No comments could be taken from Softbank about this development. NTT, which is reportedly investing to boost its fiber-optic network to 30 million users by 2010, could not be reached for comment either.

NTT DoCoMo Inc. (NYSE:DCM) announced that it has entered into an agreement with the wireless unit of AT&T Inc. (NYSE:T) to provide technical and financial support valued at US$24 million for the deployment of AT&T's 3G mobile phone network in Hawaii. Under the agreement, AT&T will launch a 3G network based on W-CDMA technology on the island of Oahu by the end of this year, with the plans to widen coverage to the rest of Hawaii by early next year. The deal would also see NTT DoCoMo making arrangements to provide enhanced 3G services for customers traveling to Hawaii.

Media sources said Sanyo Electric Co. Ltd. (OTC:SANYY) is planning to sell its cell phone sales unit, Telecom Sanyo, in a deal estimated to be worth up to 10 billion yen (US$85 million). Telecom Sanyo operates 60 stores in Japan and serves as a sales agent for NTT DoCoMo Inc. and other mobile operators. Industry observers note that Sanyo has been selling off businesses as part of its restructuring. The company is expected to hold an auction for the unit, with Telepark Corp., NEC Mobiling Ltd. and Marubeni Telecom Co. identified as possible bidders. No comment could be secured from Sanyo about this development.

Toshiba (OTCPK:TOSBF) announced its decision to recall about 10,000 laptop computer batteries released in Japan and other countries because the Sony-made (NYSE:SNE) batteries are likely to cause fire as a result of overheating. A Toshiba spokesperson announced that from September 2006 to June 2007, the Sony-made batteries have already caused three fire accidents. The company said the batteries to be recalled this time are different from those recalled in 2006.

Dell Inc. (NASDAQ:DELL) announced the expansion of its retail presence to Japan, a move that will enable it to sell different types of computers at Bic Camera stores. With the agreement, Dell said it will sell XPS M1330, Inspiron 1520 and 6400 notebooks as well as the Inspiron 530s desktop at 22 stores beginning in early August. The partnership is based on the business relationship the two companies have forged since 2000, when Dell began putting kiosks in Bic Camera stores and other retail outlets. The alliance allowed clients to order Dell products and have them shipped; it did not allow them to buy and take home units from the store. Industry observers note that until 2006, Dell dominated the PC business by selling systems directly to consumers and businesses over the Internet or telephone, at a savings accruing to customers.

Eastman Kodak Co. (EK), the world’s largest photography company, disclosed that it has filed a suit against Matsushita Electric Industrial Co. (MC-OLD), with the complaint filed in a federal court in Texas, stating that the Japanese company is using Kodak’s inventions without permission. Included in the complaint were Panasonic Corp., Victor Co., and JVC Americas Corp. Matsushita owns all of Panasonic and holds also a majority stake in Victor, which makes the JVC brand. The suit mentioned how Kodak has been “damaged by the infringement” and thus seeks a court order to stop the use of its technology.

Toshiba Corp. (OTCPK:TOSBF), Fujitsu Ltd. (OTCPK:FJTSY) and NEC Electronics Corp. (NIPNY) announced entering an alliance to jointly develop advanced 32-nanometer chips in a bid to face the strong competition in the market. Reports indicated that the three companies had been discussing sharing the estimated 100- 200 billion yen (US$830 million-US$1.6 billion) development costs estimated to be needed to compete against chip industry leaders such as Intel Corp. and Samsung Electronics Co. Toshiba, Fujitsu and NEC said they aim to setup a joint venture to make the chips, used in flat TVs and other high-power home electronics. In the alliance, Toshiba is expected to hold a leading non-majority share.

Information Technology
Springboard Research, a leading innovator in the IT market research industry, announced a research alliance with Nork Research of Japan, a dedicated IT market research company specializing in research on the IT needs of small- and medium businesses (SMBs) in Japan. Under the agreement, Springboard and Nork will work a series of research reports, in English, on the Japanese SMB market, based on data collected from on-going annual surveys of several thousand SMBs in Japan undertaken by Nork Research. Within Japan, Nork Research will also resell Springboard’s syndicated research focused on IT markets across Asia. The two companies said they will jointly conduct client studies focused on the SMB market in Japan, emerging software paradigms and business models, including SOA (Services Oriented Architecture) and SaaS (Software-as-a- Service), and general IT market trends in the Asia Pacific region. A comprehensive study on the status of SaaS business models in Japan and SaaS acceptance within Japanese SMBs based on vendor and user data undertaken jointly by Springboard Research Japan and Nork Research is scheduled for release shortly.