Rationale Behind Nidec's Senior Debt Upgrade (NJ)

| About: Nidec Corporation (NJ)

Nidec Corporation (NJ) is the world's leading manufacturer of spindle motors for hard disk drives (HDD). The Japan Credit Rating Agency (JCR) upgraded the rating of Nidec's senior debt on Tuesday from A to A+/Stable. Nidec is a largely unknown ADR but could become an increasingly interesting play as game consoles add HDD capability and when Microsoft (MSFT) finally releases Vista. I have not yet confirmed that Nidec supplies HDD motors to game console manufacturers but will let you know when I find out. If you know, please leave a comment. See below for JCR's statement on Nidec.

JCR's explanation of its upgrade of Nidec's senior debt:

Nidec is the world's top manufacturer of motors for HDDs. Market for HDDs is expected to grow continually along with expansion in their applications. The Company's revenue and earnings from motors for HDDs are on the rise. JCR thinks that the Company has entered into a phase where it can put more emphasis on profitability thanks to the increased market share. Nidec conceives growth strategy for brushless DC motors, in-car motors, optical pickup, robots. JCR thinks that the earnings will be good. The increased net income accumulated capital. Nidec plans to engage in M&A activities to increase the revenue to 1 trillion yen. Although impact of the acquisitions on the financial structure should be examined carefully, the Company's financial tolerance has increased well.

NJ 1-yr chart: