Japanese Tech Stock Weekly Summary (5/12-5/18)

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Includes: FJTSY, KNM, KNWCF, NELTY, NINOY, NTT, SFTBF, SNE, VJAPY
by: IRG Ltd

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

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Telecommunications

  • Softbank Corp. (OTCPK:SFTBF) is to form a joint venture with Alibaba.com that links Japanese small businesses to trading partners in China. Alibaba.com. said the new company will take over the operation of Alibaba.com's existing Japanese language site. Alibaba Group has built a global community of close to 30 million members from over 240 countries and regions. Japan has more than 4 million small and medium enterprises, which account for 25 percent of the country's export value and 63 percent of its import value.
  • Nippon Telegraph and Telephone Corp. (NYSE:NTT) is expected to post operating profit of 1.15 trillion yen (US$11 billion) to 1.20 trillion yen (US$11 billion) in the current year to March 2009, down 100 billion yen (US$955 million) from the previous year. The decline is due to special factors that boosted its profit by 190 billion yen (US$2 billion) in the past year to March, including capital gains from the return of pension funds which it managed on behalf of the government. The company's operating profit for the year ended March 31 likely jumped 17 percent to about 1.3 trillion yen (US$12 billion), topping its previous projection of 1.26 trillion (US$12 billion).
  • Nippon Telegraph & Telephone Corp.’s shares rose the most in 9 1/2 years in Tokyo trading after the company said it will increase its dividend payment and share buybacks this year. NTT climbed 11 percent to close at 498,000 yen on the Tokyo Stock Exchange, its biggest gain since October 1998. UBS AG raised its rating on the company to “buy” from “neutral,” citing the “surprise” dividend increase. Nomura Holdings Inc. upgraded the stock to “strong buy” from “buy.” The company raised its annual dividend payment to 11,000 yen (US$105) a share, from 9,000 yen (US$86) a year earlier. NTT plans to buy back up to 3.3 percent of its outstanding shares for as much as 200 billion yen (US$1.9 billion), or double the previous year's plan.

Hardware

  • Canon Marketing Japan (Canon MJ) announced that it has deployed salesforce.com's (NYSE:CRM) mobile solution to 1,100 users, streamlining and speeding up sales processes by enabling anytime, anywhere access to critical customer and company information. The Canon Group's 1,100 subscribers throughout Japan now have complete visibility into the sales process and can confirm or update opportunities and sales activities in their spare time from virtually anywhere without logging on to their laptops. Canon MJ had been using disparate SFA systems on a departmental basis since 2005.
  • Fujitsu Ltd. (OTCPK:FJTSY) reported its operating profit rose 12.6 percent in the past year to March, helped by brisk sales of personal computers. The company expects the momentum to continue this year despite a stronger yen. Operating profit grew to 204.99 billion yen (US$2 billion) from 182.09 billion yen (US$2 billion) in the year earlier. Revenue increased 4.5 percent to 5.33 trillion yen (US$51 billion) . The company booked a one-time cost of about 22 billion yen (US$210 million) to restructure its large scale integrated [LSI] circuit operation and write down the segment's impaired assets.
  • Japanese precision equipment maker Nikon Corp. (OTCPK:NINOY) said its annual profit rose 32.5 percent, boosted by sales of its advanced cameras and chip-making equipment, but its outlook missed forecasts. Operating profit was 135.2 billion yen (US$1.3 billion) in the year ended March 31, up from 102 billion yen (US$974 million) a year earlier. That compares with a mean market estimate of 135.7 billion yen (US$1.3 billion) based on 17 brokerages surveyed by Reuters Estimates. While hit by a stronger yen, Nikon is coasting on solid sales of its digital single-lens reflex (DSLR) cameras, while focusing on raising profits from its compact cameras rather than seeking market share.
  • Kenwood Corp. (OTC:KNWCF) and Victor Co. of Japan Ltd. (OTC:VJAPY) forecast their operating profit will quadruple in three years after combining their operations this October. Operating profit will climb to 39 billion yen (US$376 million) in the 12 months to March 2011. Total operating profit of the two companies was 9.6 billion yen in the year ended March 31. Kenwood and Victor plan to achieve annual sales of 830 billion yen (US$8 billion) in the year to March 2011.
  • Sony Corp. (NYSE:SNE) reported profit rose more than it projected after selling buildings, chip-making assets and shares of its financial unit. Net income in the 12 months ended March 31 almost tripled to a record 369.4 billion yen (US$3.5 billion), beating its 340 billion yen forecast. Sony predicted profit will fall 22 percent to 290 billion yen (US$3 billion) this fiscal year. Lower earnings this year may increase the pressure on Chairman Howard Stringer, 66, to deliver products that can outsell Nintendo Co.'s (OTCPK:NTDOY) Wii and Apple Inc.'s (NASDAQ:AAPL) iPod.
  • NEC Electronics Corp. (OTC:NELTY) forecast a half-year net loss of 2 billion yen (US$19 million) for next year, after improving net loss from 41.5 billion yen (US$396 million) to 16 billion yen (US$153 million) for the year to March 31, 2008. Revenue was down 0.7 percent to 687.7 billion yen (US$6.6 billion). Operating loss improved from 28.6 billion yen (US$272.9 million) to a profit of 5.1 billion yen (US$48.7 million) and pre-tax loss improved from 35.4 billion yen (US$337.8 million) to 3.3 billion yen (US$31.5 million). A half-year revenue of 335 billion yen (US$3.2 billion) is forecast, with a full- year breakeven net profit projected on revenue of 685 billion yen (US$6.5 billion) to March 31, 2009.

Media, Entertainment and Gaming

  • Konami Corp. (NYSE:KNM) said its net profit grew 13 percent in the year to March 2008, boosted by stronger sales of its video games. Net profit rose to 18.3 billion yen (US$175 million) from 16.2 billion yen (US$155 million) the year before, which develops software for computer games. Operating profit jumped 20.2 percent to 33.8 billion yen (US$323 million). Revenue rose 6.1 percent to 297.4 billion yen (US$2.8 billion). Profit at its work-out facility management business and in its gaming machine segment also improved.

Mobile/ Wireless

  • Shipments of mobile phone handsets in fiscal 2007 in Japan rose 6 percent from a year earlier to 51.67 million units for the third straight year of increases, an industry group. The rise is attributable to the popularity of handsets with functions to watch "one-segment" terrestrial digital broadcasting. Shipments of handsets with such a function came to 22.26 million units, accounting for roughly 43 percent of the total shipments. Substantial growth is unlikely in fiscal 2008, which began April 1, because replacement demand is expected to slow due to mobile phone providers' introduction of a system to sell handsets by installments.