Japanese Tech Stock Weekly Summary

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

Mobile/Wireless

• Masayoshi Son, president of Softbank Corp (SFTBF.PK) who owns a stake in Yahoo (YHOO) has started discussions with Jerry Yang about the proposed Microsoft (MSFT) deal. Son declined to elaborate on his role in the talks or a possible outcome. He also denied he was thinking of offering a counter offer to buy Microsoft Corp, but noted that Yahoo and Softbank have two important assets in common - Yahoo Japan and Chinese search engine Alibaba Group. Revenue related to Softbank's one-third stake in Alibaba was a major boost to its October-December profit, lifting it more than sixfold to ¥46.73 billion (US$438.8 million) from ¥7.49 billion. Softbank booked a ¥57 billion (US$535.2 million) one-time gain from the listing of affiliate Alibaba.com Ltd. in Hong Kong.

Internet

• A new website will be launched by Japan's three major newspaper publishers: Nikkei Inc., The Asahi Shimbun Co. and The Yomiuri Shimbun Holdings. The site allows viewers to compare the content of their news in a bid to create new value as news media and increase their influence on the Internet. The move comes as the industry faces difficulty maintaining an extensive home delivery system, particularly in remote areas where the population is dwindling. Japan is one of the few developed nations to have seen only a slight drop in newspaper circulation over the past decade. The partnership, which plans to turn a profit through advertising, hopes to go into the black in its third year.

• Sony (SNE) is to delay the Japanese launch of Skype on PSP due to technical problems. The company announced in January that it would start offering Skype software for downloading onto the latest PSP model, enabling PSP users to make free Web-based phone calls to other PSP users and to users of PCs equipped with Skype software. However, Sony disclosed that a microphone it planned to start selling in Japan for the new service did not meet Skype specifications, forcing the delay.

Hardware

• Microsoft will start selling a cheaper model of the Xbox 360 video-game machine in Japan to woo Japanese gamers. The entry-level offering goes on sale March 6 for about US$260, about one fifth less than the least expensive Xbox 360 now costs in Japan. The stripped-down version went on sale in the U.S. last year for US$280. Microsoft has sold 17.7 million Xbox 360 machines while Nintendo (NTDOY.PK) has already sold more than 20 million of the newer Wii and Sony has sold 10.5 million PS3 machines worldwide. The Xbox 360 has been struggling in Japan against rivals Wii and PlayStation 3.

• Toshiba Corp. (TOSBF.PK) is slashing prices of its HD DVD format players by between 40 to 50 percent as major Hollywood studios move to embrace Sony Corp's Blu-ray format high definition DVDs. The price-cut will be effective on January 2008 to boost market adoption of its next-generation DVD players by mainstream consumers, after what it said was a successful fourth quarter in the unit sales. Toshiba's players will now start as low as US$149 going up to US$399 for the top-of-range player.

Media, Entertainment and Gaming

• GONZO Rosso K.K., an online game operation company within the GDH group, has closed a licensing deal for Korean online game NOSTALE for publishing in Malaysia and Singapore. The game will be published via its subsidiary GONZO ROSSO Malaysia Sdn. Bhd. following closed beta tests in mid March 2008. NOSTALE is an MMORPG developed by Entwell Co., Ltd. and was first launched in Korea in 2006. Characters take players into the adventure-filled fantasy world of a fictional continent called Eastmile. The game has enjoyed international popularity through its launch in Japan, Taiwan, Hong Kong, and Europe. The GDH Group will continue to expand its online business and grow the GONZO Rosso brand in the Asian region.

• Capcom Co. (CCOEF.PK), the publisher of ``Resident Evil'' video games, reported that sales increased by 4.8 percent in the nine months ended Dec. 31 2007 compared to the previous year. However, net income fell 18 percent to 3.57 billion yen (US$30.5 million) and operating profit declined 8.2 percent to 6.1 billion yen (US$52 million). Sales of video games for Xbox 360, PlayStation 2 and Nintendo Co.'s Wii, helped raise revenue in the game video unit 23 percent to 30.9 billion yen (US$263.6 million) in the nine months to Dec. 31 with operating profit rising 38 percent to 6.04 billion yen (US$51.5 million). Revenue from game arcade operations dropped 0.5 percent to 9.58 billion yen (US$81.7 million) with operating profit in the business dropping 62 percent to 573 million yen (US$4.9 million). With better-than-expected sales of game software, Capcom raised its full-year revenue and operating profit forecasts. Operating profit is expected to rise 20 percent to 11.5 billion yen (US$102.7 million), a 15 percent increase from its previous forecast of 10 billion yen (US$89.3 million) and better than the 11 billion yen (US$98.2 million) average of 17 analyst estimates compiled by Bloomberg. Revenue is expected to rise 9.5 percent to 81.6 billion yen (US$728.4 million) this year, beating the company's earlier target of 78.0 billion yen (US$696.3 million) and 79.6 billion yen (US$710.6 million) estimated by the analysts. Capcom left unchanged its forecast that net income will gain 5.9 percent to 6.2 billion yen (US$55.3 million), citing a strengthening yen.

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