The following is excerpted from IRG's weekly stock report:
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- NEC Corp. plans to issue roughly 50 billion yen (US$458.15 million) in straight bonds to fund its investment in its core communications and systems businesses. With its earnings improving on a recovery in its chip segment, the technology giant intends to use the cash to bolster its overseas operations. NEC is expected to issue 30 billion yen in five-year bonds and 20 billion yen in seven-year bonds. Daiwa Securities SMBC Co. will underwrite the seven-year debt issue. It will also co-leadmanage the issuance of five-year bonds jointly with Mizuho Securities Co.
- Apple (AAPL) is offering to replace faulty batteries in iPod nanos in Japan following a government warning that the popular music players may pose a fire hazard. The offer is only for batteries with overheating problems and is not a full recall. Japan's economy, trade and industry ministry warned users of iPod nanos of a potential fire risk after it received two new reports of minor fires in August in Tokyo caused by overheating iPod nanos.
- Fujitsu Ltd. (OTCPK:FJTSY) is stepping up efforts to market optical transmission equipment in Asia, where demand for broadband communications is growing. The Japanese firm has won an order for optical transmission devices from a major Vietnamese telecommunications firm, and has also started to market these products in Malaysia and Australia. Fujitsu until now sold transmission equipment for fiber-optic telecommunications only in Japan and North America. It now aims to double annual worldwide sales in five years from about 200 billion yen currently.
- Konica Minolta Holdings Inc. will likely write off a total of 23.1 billion yen (US$210.6 million) in goodwill stemming from its acquisition of Danka Office Imaging Co. in June. Konica Minolta will make the write-offs over a period of five to eight years, starting with the current fiscal year ending March 31. Danka, a major U.S. copier sales firm, has been handling products from Canon Inc. (CAJ) and Toshiba Tec Corp. (OTCPK:TOSBF) Its sales and operating profit came to 42 billion yen (US$386 million) and 300 million yen (US$3 million), respectively, in the previous fiscal year.
- Fujifilm Holdings Corp. (FUJI) cuts its annual outlook. Net income for the year ending March 31 is now expected to be 80 billion yen (US$733 million), 27 percent less than the April estimate of 110 billion yen (US$1 billion), citing rising raw material costs and restructuring expenses. Sales will probably reach 2.85 trillion yen (US$26.2 billion), 1.7 percent less than previously forecast. Fujifilm also cut its outlook for operating profit, or revenue minus the cost of goods sold and administrative expenses, by 24 percent to 160 billion yen (US$1.5 billion). The company cited additional costs of 20 billion yen (US$183.6 million) to reorganize its digital-camera division and office-equipment operations and 10 billion yen (US$91.4 million) for aluminum and silver.
Media, Entertainment and Gaming
- Japan's Communications Ministry will call for 60 billion yen (US$547 million) in the fiscal 2009 budget to help the transition from analog to digital terrestrial television broadcasts. The ministry's request, a 10-fold increase from the current fiscal year, will be used to help fund nationwide support centers and the distribution of free converters to those receiving public assistance. The switch to digital broadcasts takes place in July 2011. Planned outlays for welfare households come to 12.8 billion yen (US$118 million), including antenna upgrades. The ministry will target 400,000 households in fiscal 2009, with the initiative to continue the following year.
- Nintendo Co. (OTCPK:NTDOY) raised its full-year profit forecast by 26 percent because of higher-than anticipated sales of Wii and DS game players, sending the company's shares to their biggest gain in nine months. Net income will climb 59 percent to 410 billion yen (US$3.8 billion) in the year ending March 31, the Kyoto-based company said. The guidance exceeded the 382.6 billion yen median of 23 analyst estimates compiled by Bloomberg. Nintendo, poised to pass Sony Corp. (SNE) as the world's largest maker of game players for the first time in at least 13 years, said sales of its Wii console will rise 42 percent this year and reversed projections that DS sales will drop. Before today, the stock had fallen 17 percent since July 30, when the company left its full-year projections unchanged.
- Square Enix Co., creator of the “Final Fantasy” series of role-playing video games, offered to buy Tecmo Ltd. to bolster its game-software business. The company will pay 920 yen (US$8.45) per Tecmo share, 30 percent higher than previous closing price, on condition it receives an agreement notice from Tecmo by Sept. 4, 2008. The offer for the creator of the “Dead or Alive” video-game series is valued at 22.3 billion yen (US$205 million), based on data compiled by Bloomberg. Japanese game-software makers are following larger overseas rivals in seeking partners to share rising development costs as consoles from Sony Corp. and Microsoft Corp. (MSFT) offer higher definition images, faster speeds and the ability to play via the Internet. Activision (ATVI) and Vivendi's (OTCPK:VIVEF) Blizzard video-game division in July merged to create the world's biggest game- software publisher.
- Codima, a global provider of software tools for VoIP and information technology asset management, announced that the company entered into a letter of intent to acquire G-major Japan Ltd, a Japanese vertical market distributor of network management software. In acquiring the locally established distributor, Codima consolidates its presence in the Japanese market. The acquisition is scheduled to close by the end of September 2008. Terms of the agreement were not disclosed.
- Mitsubishi Electric Corp. (MSHBY) plans to invest 60 billion yen (US$549 million) to quadruple its solar battery production in four years to meet growing demand for renewable energy. Spain and Germany are cutting subsidies for solar power, but Mitsubishi Electric and rivals such as Sharp Corp (OTCPK:SHCAY) and Kyocera Corp (KYO) are betting on growing solar power demand in the U.S. given high oil prices and fears about climate change. Japan's solar market is also expected to grow, if modestly, with sources saying that the Ministry of Economy, Trade and Industry plans to seek 23.8 billion yen (US$219 million) for subsidies for residential solar panels.