Japanese Tech Stock Weekly Summary (Sept. 15-21)

by: IRG Ltd

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

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Mobile/ Wireless

  • Nokia Corp.'s (NYSE:NOK) luxury cellular phone brand, Vertu, unveiled a handset to be introduced in Japan as soon as this year. The handcrafted phone, made in England, will likely sell for between 890,000 yen (US$8,296) and 5 million yen (US$46,611). It is expected to be configured for either the NTT DoCoMo’s (NYSE:DCM) or Softbank Mobile's (OTC:SFBTF) cell phone services. The handset is fashioned from gold, platinum and other precious metals and boasts a crystal sapphire face. The preset ring tones are provided by the London Symphony Orchestra. Vertu is to open its first Japanese store in Tokyo's swanky Ginza district in December, and plans to set up shop elsewhere in the nation beginning next year. The Nokia unit could also sell its handsets in luxury watch shops and department stores.

Media, Gaming, and Entertainment

  • In a move to bolster its domestic game business, the Japanese subsidiary of Walt Disney Co. (NYSE:DIS) will combine its Internet and packaged-software divisions next month. Bringing these two organizations together is aimed at hastening development of products and services that can be enjoyed on a variety of platforms, including game consoles, mobile phones and personal computers. The firm's strategy is to penetrate the game market with the Disney brand, making it a mainstay alongside movies and theme parks. Plans include creating new online communities by attracting fans via games. For example, Disney Japan will launch a service that tracks a user's history when playing Nintendo Co.'s (OTCPK:NTDOY) Nintendo DS hand-held, awarding unique items.


  • Hitachi Ltd. (HIT) will buy plasma TV parts from Panasonic-maker Matsushita Electric Industrial Co. (MC-OLD), as the firms pool resources in a flat TV market dominated by LCD technology. Matsushita and Hitachi have lost market share and face intensifying price competition from liquid crystal display makers Sharp (OTCPK:SHCAY), Samsung Electronics and LG Electronics. Hitachi, which is aiming to turn around its loss-making flat TV business, will buy fabricated glass panels and other TV parts such as modules from Matsushita, as its bigger rival makes them more cheaply. Matsushita secures a customer amid plans to build a new domestic plasma panel and TV plant next year. Hitachi will book a 40 billion yen (US$372.9 million) impairment loss on its existing glass panel facilities. Hitachi would continue to make the circuit boards that dictate a television set’s brightness and color depth at its own unit, Hitachi Plasma Display Ltd.
  • Microsoft Corp.'s (NASDAQ:MSFT) Xbox 360 has scored the title of the top-selling home video game console in Japan. Sales of the Xbox 360 in that seven-day period came to 28,681 units, compared with 27,057 units for Nintendo Co.'s Wii and 8,050 units for the Sony (NYSE:SNE) group's PlayStation 3. The Xbox 360's rise to the top likely stemmed from its September 11 price cuts of up to roughly 30 percent for various models, as well as the release of a role-playing game for the Xbox 360 by Square Enix Co.
  • Canon Inc. (NYSE:CAJ) would spend up to US$479 million to buy back its own shares, which have lost a quarter of their value over the past month to a three-year low. Canon's stock has tumbled sharply since rival Ricoh would buy U.S. distributor Ikon Office Solutions (IKN) raising concerns that Canon would lose a key distributor and market share in the U.S. market. Canon's stock has also been hit by worries that a slowing global economy would cut into demand for its products, which also include printers, copiers and equipment used in the production of semiconductors and flat panel displays. Canon would buy back up to 14.5 million of its own shares, or up to 50 billion yen (US$479 million) worth, from Sept. 17 to Oct. 20. The buyback is equal to about 1.1 percent of its total shares outstanding.


  • Orders for Japanese equipment used to make semiconductors fell 47.7 percent in August from the same month last year as chip makers reined in spending. It was the 18th straight month of year-on-year declines amid a glut of memory chip supply. Orders in August came to 72.4 billion yen (US$674.9 million), down 47.7 percent from the previous year. The book-to-bill ratio was 1.07 in August, as orders outpaced sales for the second straight month. The ratio means new orders worth 107 yen (US$1.00) were received for every 100 yen (US$0.93) of products delivered in June to August. Based on the preliminary report, which gives three-month moving averages of orders and sales, sales in August came to 71.4 billion yen (US$664.3 million), down 59.2 percent from the previous year.
  • Mitsubishi Chemical intends to reenter the manufacturing of semiconductor materials, from which it largely withdrew in 2000, with the aim of accelerating the development of two of its next-generation businesses while shoring up expertise in semiconductor materials. The two businesses are materials for light-emitting diodes based on gallium nitride substrates for use in advanced electronic displays, and other semiconductor materials for application in organic thin-film solar cells, which are expected to rely heavily on semiconductor technologies for their commercialization. To help develop new types of semiconductor materials and establish its presence in the semiconductor industry, the company has joined the Consortium for Advanced Semiconductor Materials and Related Technologies, or CASMAT, an industry group seeking to strengthen the global competitiveness of Japanese makers of semiconductor materials.
  • NEC Electronics Corp. and Germany's Elmos Semiconductor AG plan to jointly develop and manufacture semiconductor products for automotive and industrial markets. The companies aim to combine NEC Electronics' strength in microcontrollers with Elmos' expertise in analog chip technologies. Chip makers are increasingly joining forces to shrink chips and boost performance at lower costs. The partnership with Elmos follows NEC Electronics' announcement last week that it would team up with IBM (NYSE:IBM) and others on next-generation microchips.
  • The head of Toshiba's (OTCPK:TOSBF) semiconductor business said the flash memory maker was interested in a bid for partner SanDisk (SNDK) to prevent a takeover by rival Samsung. South Korea's Samsung Electronics said earlier this month that it may buy SanDisk Corp., in a move that could frustrate catch up plans by Toshiba to nearly double its chip production capacity in partnership with SanDisk. Samsung, Toshiba and other chip makers are racing to boost  output and lower per-chip costs even as weak prices of flash memory, used in digital cameras, mobile phones and music players, hurt revenue and their appetite to invest. Acquiring SanDisk, known for its memory storage cards, could help Samsung cut licensing fees it pays out and help it expand its market share at the expense of Toshiba.