Japanese Tech Stock Weekly Summary (8/11-8/17)

by: IRG Ltd

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

• • •


  • Officials at Softbank (OTC:SFBTF) say competition from Apple (NASDAQ:AAPL) will drive domestic vendors to revamp portfolios. The arrival of Apple Inc.'s iPhone 3G will force Japanese cellphone makers to revamp their handsets to allow increasingly sophisticated software. Faced with increased competition, Japanese handset providers will have to provide more software-oriented machines like the touch-screen iPhone, said Tetsuzo Matsumoto, a senior executive vice president at Softbank Mobile. The iPhone's key advantage is that more features and applications can be added to suit the needs of users, he told a press conference.


  • NEC Corp. is considering a hike in wholesale prices of new personal computer models to offset rising costs, but the plan could mean losing domestic market share. Foreign makers like Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ), helped by favorable currency rates, are undercutting their Japanese rivals with double-digit percentage gains in unit sales. NEC and its original equipment manufacturers are being squeezed by falling prices and the rising cost of plastic, shipping and labor in China, where the computers are made. The cost increases are outpacing price falls in PC memory, hard drives and displays at NEC.


  • Tokyo Electron Ltd. said its net profit dropped 51 percent in the fiscal first quarter ended in June from a year earlier, as chipmakers started cutting back investments and reducing orders for semiconductor-making equipment due to falling chip prices. The company, a top-ranked maker of semiconductor chip processing equipment issued a profit warning for the first half to September and full year to March 2009. It announced reductions in annual dividend payments and research and development expenditure as part of efforts to deal with a rapidly deteriorating business climate. Net profit in the first quarter fell to 12.85 billion yen (US$117.2 million). The company also released its expectations for the full year until March 2009. Tokyo Electron is expecting net profit of 33 billion yen (US$298 million), operating profit of 51 billion (US$461 million) and revenue of 630 billion (US$5697 million), revising down the forecasts it made in May for net profit of 55 billion yen (US$497 million), operating profit of 84 billion yen (US$760 million) and revenue of 700 billion yen (US$6331 million). The company also lowered its first-half to September forecasts to 15 billion yen (US$136 million) for net profit, 22.5 billion (US$204 million) for operating profit and 301.5 billion (US$2727 million) for revenue, from earlier projections of net profit of 17 billion yen (US$154 million), operating profit of 26 billion (US$235 million) and revenue of 300 billion (US$2713 million).


  • NTT Communications (NYSE:DCM) has launched a public social networking service [SNS] with a mutual Japanese-Chinese translating function. The SNS, named Talk Feel, supports communication based on casual conversations between Japanese and Chinese. The Japanese-Chinese/Chinese-Japanese machine translating function makes communication possible even between those who only speak their own languages. The website features a forum where users can post short comments. The website also features a Q&A community and distributes the latest news in China to foster deeper communication between Chinese and Japanese users of the service.

Media, Entertainment and Gaming

  • Rakuten Inc. increased net profit 25.7 percent to 7.3 billion yen (US$66 million) on revenue up 23.1 percent to 121.8 billion yen (US$1101 million) for the half-year to June 30, 2008. Operating profit increased 35.7 percent to 18.3 billion yen (US$165 million) and ordinary profit rose 16.1 percent to 17.4 billion yen (US$157 million).

Alternative Energy

  • Sanyo Electric (OTC:SANYY) aimed to boost its solar cell output capacity more than 10-fold to 4 gigawatts a year by 2020, or about 10 percent of the global market. Demand for renewable energy such as solar cells is growing fast due to higher oil prices and concern about climate change. Solar cell production capacity at Sanyo, which competes with Japan's Sharp (OTCPK:SHCAY), Germany's Q-Cells and Suntech Power (NYSE:STP) in China, came to 260 megawatts in the year that ended in March. Sanyo, which had a global market share of 4.4 percent last year.