Japanese Tech Stock Weekly Summary

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

Hardware

• Sony (SNE) replaced the head of its loss making television unit in its latest move to shore up the business, which has been buffeted by tumbling prices of flat-panel televisions. Takashi Fukuda will step down as president of its TV business group after only a year in the job. He will be replaced by Hiroshi Yoshioka, head of the company’s audio unit, effective April 1. Deep price falls for flat-panel TVs have outpaced Sony’s ability to cut manufacturing costs. The television unit incurred a 60 billion yen (US$590.4 million) loss in the six months up to the end of September, and is expected to post a loss for the full fiscal year to the end of March.

• Sony said it would cut costs and attract more orders to offset the negative impact of the Japanese yen's strength on its profit. A stronger yen against the U.S. dollar threatens to cut into Sony's profits at a time when it is already struggling to boost margins on flat-panel televisions because of falling prices, and is playing catch up with Nintendo (NTDOY.PK) in the video game market. The rapid rise of the yen and other Asian currencies against the dollar has hurt exports from the region to the U.S., a key sales destination for companies such as Sony, which earns 75 percent of its revenues overseas. For every one yen rise against the U.S. dollar, the company loses about 6 billion yen (US$59.1 million). In 2007 alone, the yen has strengthened to about 102.5 yen to US$1.00 from about 111 yen.

• Sony Corp. said that it would probably meet its earnings forecast as cost cuts offset a stronger yen. According to the company, growth remains stable and the company is maintaining its full-year forecasts given in January. Sony projected net income would more than double to 340 billion yen (US$3.3 billion) in the year ended March 31. Sony will cut costs and expand output in countries such as Slovakia to mitigate the impact of a stronger Japanese currency.

• Fujitsu (FJTSY.PK) named SVP Kuniaki Nozoe as the new President of the company following a reshuffle in its businesses and attempts to reverse a profit decline. The management change comes as Fujitsu forecast a 60 percent drop in net profit this fiscal year to 40 billion yen (US$394 million) from 102.4 billion yen (US$1.0 billion). Fujitsu recently moved to distance itself from the expensive and competitive hardware business, saying in January that it would spin off its LSI chip operation. Mr. Kurokawa took the helm after Fujitsu suffered a net loss of 122.1 billion yen in 2003. Prior to the company's expected profit drop this fiscal year, he led the company through a four-year recovery period, increasing its margins and focusing on profitable businesses.

• Sharp Electronics Corp. announced the appointment of Daisuke (Doug) Koshima as Chairman and Chief Executive Officer, effective April 1, 2008. He replaces Toshihiko Fujimoto, who will be transferring to a new assignment as General Manager for Strategic Planning with the International Business Group, Japan. Mr. Koshima has spent 37 years with Sharp.

Semiconductor

• Tokyo Electron (TOELF) [TEL] has begun receiving orders from production fabs throughout the world for the Trias HP Ti, the company's latest 300mm metal CVD system. According to TEL, the Trias HP Ti (High Performance Ti) has the ability to deposit titanium (Ti) films over a wide temperature range, including temperatures that are significantly lower than those typically required by conventional Ti CVD reactors. The Trias HP Ti incorporates a proprietary showerhead gas dispersion system with optimized surface treatments to reduce particle-related film defects to the levels required for 32nm devices and beyond.

• Sumco Corp. (SUMCF) is expanding production of wafers for solar cells. The company plans to increase output without undertaking any new capital spending. To that end, subsidiary Sumco Solar Corp. will begin full-scale mass production at a large furnace and increase production speed. To reduce wafer breaking and cracking and thus boost yields, the process of cutting ingots into pieces 150mm square and less than 200 microns thick will be improved.

• Japan's Elpida Memory Inc is in talks with Taiwan's ProMOS Technologies Inc. about bilateral cooperation. There are as yet no details to disclose about the plans to tie up. Elpida has long been a partner of Powerchip Semiconductor Corp. The two have established a joint venture in Taiwan, Rexchip Electronics Corp.

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