Japanese Tech Stock Weekly Summary

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

Media, Entertainment and Gaming

• NTT DoCoMo (DCM) and Google (GOOG) announced their forging a partnership that is expected to create innovation in the mobile Internet area. According to the official of Products and Services Division of NTT DoCoMo, the partnership aims at offering more “groundbreaking services” through the synergy between DoCoMo and Google, and working on the “mobilization of the Internet.” The two companies said the partnership includes enhancement of the search service based on DoCoMo's "imode" Internet service, targeted advertising based on search targets, the development of an i-mode version of each Google application and service, the consideration of a mobile phone product incorporating the "Android" mobile software platform developed by Google, and the consideration of new mobile marketing services based on i-mode.

• Nintendo Co. (NTDOY.PK) announced that its net profit posted a 96.3 percent rise in the nine months to December to 258.8 billion yen (US$2.4 billion). The company said its operating profit climbed 135.1 percent to 394 billion yen (US$3.6 billion), with its sales posting a growth of 84.7 percent to 1.3 trillion yen (US$12.1 billion). With the announcement, Nintendo also raised its sales forecast for the full year to March to 1.6 trillion yen (US$15 billion), from an earlier estimate of 1.5 trillion yen (US$14 billion), and its operating profit forecast to 460 billion yen (US$4.3 billion) from 420 billion yen (US$4 billion). The company, however, retained its net-profit forecast at 275 billion yen (US$2.5 billion), with the firm attributing the decision to the appreciation of the yen. During the nine months, the company said it sold 24.5 million of Nintendo DS.

Internet

• Internet Initiative Japan Inc. (IIJI) announced its launching of the IIJ Mobile, a mobile data communications service for corporate customers. The move is IIJ's first entry into the mobile communications market as a mobile virtual network operator [MVNO], providing comprehensive solutions for businesses employing mobile broadband. Under the offering, IIJ Mobile uses NTT DoCoMo's 3G FOMA network and data communications terminals to provide Internet access with high-speed mobile data communications up to 3.6 Mbps. IIJ plans to expand service offerings and functions, such as providing access to closed networks without going through the Internet, or providing mobile access as a part of the WAN using some of IIJ's existing services. This will enable IIJ to provide one-stop corporate network construction and operation that includes mobile data communications.

Mobile/Wireless

• Sanyo Electric Co. Ltd. (SANYY.PK) announced that it has reached a definitive agreement with Kyocera Corp. (KYO) to transfer its mobile phone business to Kyocera. The mobile phone business refers to the entire CDMA handsets business (excluding Tottori Sanyo) as well as the PHS handsets, base station business and other operations related to the wireless communications system business. Following the transfer, the current 2,000 employees in Sanyo's mobile phone business (excluding contract workers and temporary agency staff) will work for Kyocera. The announcement said that Kyocera will continue to use the Sanyo brand on handsets both in Japan and overseas. Kyocera will also continue its own brand, and its phone business will be developed using both the Kyocera and Sanyo brands. For the North American market, the current distribution channels will continue to be supported and utilized. And in addition to Kyocera Wireless Corp, the company’s current subsidiary in North America, a new company will be established.

• The Walt Disney Company Japan Ltd. disclosed its plan to launch a mobile phone service called Disney Mobile in collaboration with SoftBank Mobile Corp on March 1, 2008. Under the offering, Disney will release dedicated handsets at the same time. In order to get access to this service, the user needs to sign a contract with Disney and use an e-mail address with the domain name "disney.ne.jp." Although the company will run the business as a mobile virtual network operator [MVNO], Walt Disney Company Japan stressed that the service will be distributed in collaboration with SoftBank Mobile. The service is targeted at women in their twenties and thirties, age groups profiled as users of Disney's content.

Hardware

• According to media sources in Japan, Sanyo Electric Co. Ltd. revealed its plans to dissolve its TV development joint venture with Taiwan's Quanta Computer Inc. In March 2006, the two companies announced that they would form a venture to manufacture and sell flat TVs. Following the announcement, however, Taiwan's AU Optronics Corp (AUO) agreed to buy Quanta Computer's liquid crystal display [LCD] unit, Quanta Display, a move that jeopardized the venture even before its establishment. In 2006, Sanyo and Quanta set up the TV joint venture, Sanyo Visual Technology, with a capitalization of 100 million yen (US$937,300). The scope of the venture, at this point, was limited to product development and joint procurement of parts and materials. The venture is set to end January 30 this year.

Telecommunications

• China Netcom (CN) announced the formal opening of a new branch China Netcom (Japan) in Tokyo. China Netcom (Japan) is a wholly-owned company of China Netcom and will be engaged in promoting the development of international voice, data lines and Internet service between China and Japan. The branch is expected to build closer relations with operators of Japan and the Asia Pacific region and provide related wholesale service to international operators. China Netcom said that the Japanese branch will work with the company's branch in Hong Kong, the U.S. and Europe to provide more convenience and better service to clients. China Netcom has been exploring the Japanese market for a long time. In March last year, China Netcom made an investment of US$2.8 million in setting up a solely-owned company to apply for telecom licenses from the Japanese authority. In a related development, China Netcom said it has entered into an agreement with KDDI of Japan on the broadcasting of the 2008 Beijing Olympic Games.

• NTT DoCoMo Inc. announced that it has raised its stake in Philippine Long Distance Telephone Co [PLDT] (PHI), bringing the NTT group's overall holding in the Philippines' largest telecom firm to 20 percent. The acquisition of shares allows the Japanese firm to consider PLDT as an equity-method affiliate. Since March 2007, DoCoMo, which controls more than half of Japan's mobile market, has acquired 12.5 million additional PLDT shares for 86.7 billion yen (US$812.5 million). The combined investment in PLDT of DoCoMo and NTT Communications, another unit of NTT, now totals 164.3 billion yen (US$1.5 billion).

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