Japanese Tech Stock Weekly Summary

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

Media, Entertainment and Gaming

• U.S. film studios Paramount Pictures Corp. and DreamWorks Animation SKG announced their decision to give their exclusive support behind the high-definition DVD format being promoted by a group of companies led by Toshiba Corp. (TOSBF.PK). Industry observers see the shift of Viacom Inc.'s (VIA) Paramount to the HD DVD format as a major setback for Sony Corp., Matsushita Electrical Industrial Co. and others that have been pushing the Blu-ray disc technology. Observers note that the major Hollywood studio had previously released its titles in Blu-ray, a next-generation optical disc format, and HD DVD, which was developed by Toshiba, NEC Corp. (NIPNY) and other companies. The report said both Paramount and DreamWorks Animation opted for the lower manufacturing costs and high-quality technology of HD DVD in preparation of the release of its major productions by autumn.

Internet

• According to its president, Acca Networks Co., a Japanese DSL provider, has plans to set up partnerships with other companies to offer WiMAX services. The official said that the company aims to put together a plan for the new services it is offering even as it sees alliance with other firms as a way to widen operations and generate funds. In what it envisions as a joint venture for the new services based on WiMAX, Acca said it will retain a majority stake in those partnerships. Acca is one of the companies in the country trying to secure government licenses for the next-generation high- speed wireless communications services. Industry sources indicate that the country’s communications ministry is set to grant WiMAX licenses to one or two companies.

• Industry sources indicated that Rakuten Inc. has reaffirmed with its plan to increase its stake in Tokyo Broadcasting System Inc. to about 21 percent. According to its top official, Rakuten’s proposed acquisition of additional TBS shares is a bid to transforming the broadcaster into an equity- method affiliate of the Internet firm. The move to up its stake in TBS to more than 20 percent is seen as enabling Rakuten, now the largest TBS shareholder, to reflect the broadcaster's earnings in its consolidated accounting procedure in proportion to the size of its shareholding. Rakuten said its net profit for the January-June period dropped 18.3 percent from the previous year to 5.8 billion yen (US$49.8 million) while its operating profit declined 30.2 percent year on year to 13.4 billion yen (US$115.1 million). The company said its sales went down 6.1 percent to 98.9 billion yen (US$849.8 million).

Mobile/Wireless

• The country’s Ministry of Economy, Trade and Industry reported that it is spearheading a campaign that would see leading consumer electronics manufacturers notifying consumers about product recalls by means of mobile phones. Under the present system, purchasers can register through a variety of methods, including the use of postcards that come with the products. With the new scheme, home electronics manufacturers would install information in their products using the QR code or IC tag systems. Manufacturers can then notify consumers about product safety, recalls and after-sales service by e-mailing to their cell phones. The ministry said that it has plans to request for funds to help set up the project.

• Matsushita Electric Industrial [MEI] (MC) revealed that it will cover the direct costs of a battery recall affecting 46 million Nokia mobile phones. MEI is the parent company of Matsushita Battery Industrial, which manufactured the batteries. MEI placed the costs to be covered at between 10 billion yen (US$86 million) and 20 billion yen (US$172 million), with the company accruing those costs in the first half of 2008. . The costs include money Nokia had to spend on logistics and call centers as well as the replacement battery costs.

Hardware

• Sharp Corp. (SHCAY.PK) announced the unveiling of a prototype of what the company described as the world's thinnest, lightest and most energy-efficient LCD TV. The 52-inch model is only 2-cm thick, weighs 25 kg and consumes 140 kwh per year, compared to the firm’s current 52-inch model, which is 8.1 cm thick and weighs roughly 50 kg. Sharp said the prototype also uses half the conventional model's power and one-fourth of that used by a comparable plasma TV.

• Fujitsu (FJTSY.PK) announced the development of a laptop with a biodegradable chassis, which was made from a cornstarch-based plastic expected to decompose within months. The product has been dubbed the Fujitsu LifeBook. Cornstarch-based plastics release 15 percent less carbon emissions than traditional plastics, which are made from non-renewable materials, including oil, coal and natural gas. In other related developments, Fujitsu said it has also manufactured mobile phones and point-of- sale terminals with the biodegradable plastic.

Semiconductors

• According to the Japanese government, the Economy, Trade and Industry Ministry is setting up a project aimed at developing a high-performance computer chip with a processing speed ten times faster than existing ones. The ministry will be working with the industry from fiscal 2008. The project is looking to boosting the semiconductor performance by making a "3-D" semiconductor to be used for technologies related to products like domestic robots. The ministry disclosed that it will seek funding of about 1.5 billion yen (US$12.8 million) for the project. The ministry said it will also join leading domestic semiconductor companies, such as Toshiba Corp. and Fujitsu Ltd., for the five-year project.

Information Technology

• Sony Corp. (SNE) disclosed plans to sell a satellite navigation accessory, which turns its handheld PSP game consoles into a navigation device. Industry observers see the PSP equipped with the global positioning [GPS] accessory as competing with dedicated navigation devices such as those made by TomTom and Garmin Ltd. (GRMN). According to an official of the firm’s European games unit, the accessory would be priced between 100 and 150 euros (US$135-$200). In a separate development, Sony said it is set to launch also an accessory for its flagship PlayStation 3 that will turn the games console into a digital video recorder.

Ventures/Investments

• Industry sources said that New York-based Perry Capital LLC has challenged NEC Corp. (NIPNY) to explain why it has turned down a US$1.3 billion offer to buy 25 percent of an NEC affiliate. Industry analysts see this move of the investor as a sign that it would continue to follow options that would give NEC Electronics Corp. independence from NEC.

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