Japanese Tech Stock Weekly Summary

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

Media, Entertainment and Gaming

• Nikkei Inc., the Asahi Shimbun Co. and the Yomiuri Shimbun Holdings announced their entering into an alliance that will see the leading Japanese newspaper publishers engage in Internet-based news services and newspaper distribution operations. The three media companies said that they will set up a joint web site in 2008 that will enable consumers to read for free major articles and editorials appearing on their paper. Under the agreement, they will maintain their respective news web sites and will consider accepting other groups to the alliance later.

Internet

• According to its president, Sony Bank has plans to double its assets in custody to 2 trillion yen (US$17 billion) in four to five years. The official said its move is not focused on competition but rather in strengthening its financial standing in the market. Industry observers see intense competition among Japanese Internet-only banks, with the entry in September of SBI Sumishin Net Bank, a fiftyfifty joint venture between Sumitomo Trust & Banking Co. and SBI Holdings Inc. Sony also announced the launch of Sony Bank Securities Inc., tasked with making available to Sony Bank customers asset management services, such as cash stock transactions, which cannot be undertaken by a bank. Sony Bank said it is looking to offering services that would allow clients to manage simultaneously assets held in accounts at both Sony Bank and Sony Bank Securities. Sony Financial Holdings Inc. holds 88 percent of Sony Bank, with the remaining 18 percent owned by Sumitomo Mitsui Banking Corp., the core banking unit of Sumitomo Mitsui Financial Group Inc.

• Yahoo (YHOO) Japan Corp. and Mitsui & Co. (MITSY) announced their plans to launch a web outlet mall that will sell fashionable foreign brand items at low prices. The online mall, Premium Brand Avenue, will open at the Yahoo! Shopping site, offering the clothes, bags and accessories of 15 famous brands. The two groups said the online mall targets young consumers in their 20s and 30s. The web mall will be operated by LX Inc., an online fashion goods retailer affiliated with Mitsui. Yahoo Japan and Mitsui said they will increase the number of brands available online to more than 100 within two years.

Mobile/Wireless

• Softbank Mobile Corp. (SFTBF.PK) announced its plan to enter into an alliance with Siemens AG of Germany to strengthen its wireless communication module business. Under the agreement, Siemens will sell the products of its own brand, while Softbank Mobile, a unit of Softbank Corp., will offer the network. They two companies said they aim to intend work on joint marketing activities.

Hardware

• Toshiba Corp. (TOSBF.PK) and Microsoft Corp. (MSFT) announced their move to form a consortium with the aim of promoting products for the high-definition DVD system, a next-generation DVD format. The Advanced Interactivity Consortium aims to maximize consumer satisfaction worldwide by accelerating industry-wide adoption of advanced interactivity and interoperability across a broad array of HD DVD products.

• Matsushita Electric Industrial Co. Ltd. (MC) announced that it would launch new Blu-ray optical disc recorders in November. The company said the device allows more hours of full high-definition recording on a single disc than any others available. Matsushita and Sony Corp. promote the Blu-ray technology, which competes with the HD DVD format, backed by Toshiba Corp. Matsushita also said it will offer the world's first DVD recorders that can store full high-definition programs on conventional DVD discs next month. Video rental chain Blockbuster Inc., the largest U.S. provider of home movie entertainment, came out in supporting the Blu-ray format earlier in June. Paramount Pictures and DreamWorks Animation SKG Inc. entered into exclusivity deals in August to distribute their next-generation discs on Toshiba's HD DVD format for the next 18 months.

Semiconductors

• Sony Corp. (SNE) announced that it has entered into an alliance with Infineon Technologies AG (IFX) to develop chips that industry sources described as competing directly with those from Samsung Electronics Co. and Elpida Memory Inc. Under the partnership, Qimonda will make the chips based on the designs. This development is expected to help Sony with its chip development costs. Industry sources said Sony and Qimonda will each own 50 percent of the venture. DRAM chips are mainly used in computers to speed up data processing by temporarily calling up data from the hard drive. In 2006, Samsung was the largest producer of non-computer DRAMs last year, followed by Elpida, Qimonda, Micron Technology Inc. and Hynix Semiconductor Inc.

• Techno Alpha Co., a company that sells imported semiconductor-manufacturing equipment, announced that it will list on the Osaka Securities Exchange's Hercules market for startups. Techno Alpha was established in 1989 as a spin-off of British trading company Dodwell's electronics division. The Tokyo-based company said it will use the proceeds from the IPO, which is placed at 150 million yen (US$1.2 million), mainly for the procurement of chip-making equipment for sale. For the business year to November, Techno Alpha expects a 4.1 percent rise in its unconsolidated sales to 2.8 billion yen (US$24 million) and a 19.4 percent increase in its net profit to 167 million yen (US$1.2 million).

Ventures/Investments

• Sony’s Financial Holdings announced that it will raise 348 billion yen (US$3 billion) through an IPO after setting the price at the top end of an indicated range. Sony Financial Holdings priced the IPO at 400,000 yen (US$3,419) per share, compared with the indicated price range of 380,000 - 400,000 yen (US$3,248-US$3,419). Sony Financial Holdings oversees the group’s online banking and insurance businesses. The group said the proceeds from the offerings are seen to allow Sony to boost its core electronic operations. The listing of the financial unit is Sony's latest step to lower its exposure to non-core businesses. The announcement indicated that Sony will offer 795,000 existing shares, cutting its stake in the wholly owned unit to 60 percent. The financial unit plans to sell 75,000 new shares. The IPO is being lead-managed by Nomura Securities and JPMorgan.

• Victor Co. of Japan (VJAPY.PK) and Kenwood Corp. (KNWCF.PK) announced their setting up of a joint company to develop technologies for car electronics and home-use audio equipment. The two companies also declared that they plan to integrate their operations by the end of 2008. The new company, J&K Technologies Corp., is capitalized at 245 million yen, owned equally by the company known as JVC and by Kenwood. Under the agreement, JVC and Kenwood will mutually consign production to each other and jointly procure parts.

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