Japanese Tech Stock Weekly Summary (Sept. 29 - Oct. 5)

by: IRG Ltd

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

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  • Matsushita Electric Industrial Co. changed its name to Panasonic Corp. (PC) at a total cost of around 40.0 billion yen (US$380.0 million) in a bid to boost its brand value globally. As well as dropping the surname of its founder, the late Konosuke Matsushita, Panasonic also ditched its National brand, which has been in use for over 80 years for white goods in Japan, and intends to have all of its products carry the Panasonic brand by the end of March 2010. Panasonic has long been the firm's brand name abroad and for audiovisual appliances sold in Japan. Some people do not know that Panasonic-brand products are made by Matsushita. This means that the company's value has been dispersed under the separate names of Matsushita, Panasonic and National.
  • Canon Inc. (NYSE:CAJ) acquired a small U.S. office equipment distributor and may continue to acquire more to protect its market position after key distributor Ikon Office Solutions was acquired by rival Ricoh Co. Ricoh bought Ikon for US$1.6 billion and aims to replace Canon products with its own printers and copiers in three to four years. About 60 percent of the products handled by Ikon are made by Canon, and analysts have warned the deal could deal a big blow to its position in the world market. Canon would buy Newcal Industries, a longtime distributor of its copiers, scanners and fax machines based in San Francisco, for an undisclosed sum. Xerox Corp. (NYSE:XRX) bought Global Imaging Systems for US$1.5 billion in May 2007, while Konica Minolta Holdings earlier this year clinched a deal for Danka Business System's U.S. operations.
  • Hoya Corp. and Showa Denko will merge their hard disk media businesses and will set up a joint venture around January next year. Showa Denko will own 75 percent of the new company, and Hoya will own the rest. Earnings contributions from its hard disk media operations will be smaller than previously expected from the January-March quarter because the new company will be an equitymethod company. The deal will not affect Show Denko's 2008 earnings outlook.
  • Matsushita Electric Industrial Co. plans to double its global notebook personal computer sales to 1.3 million units in fiscal 2012 from 660,000 units in fiscal 2007 that ended in March this year. Matsushita will emphasize the light weight and long battery life of its notebooks while keeping away from strong price-cutting competition in which PC makers from the U.S., Taiwan and elsewhere have offered small models priced around 50,000 yen (US$475). Matsushita retained the largest share of the Japanese market for 12-inch and smaller notebooks for three years to 2007. Demand for notebook PCs has been growing in China and other emerging economies, while European and U.S. corporate users have been shifting from desktop PCs to notebooks. Matsushita will launch winter models of notebook PCs including the new 14.1-inch screen F8 series. The F8 will sell for around 290,000 yen (US$2,754). Prices for smaller notebooks will range from 200,000 yen (US$1,899) to 295,000 yen (US$2,800).
  • Panasonic would lift up its global laptop computer output to 1.3 million sets by 2012, in contrast to 660,000 in 2007. As the U.S. and Taiwan-based PC makers are rolling out low-price mini laptop computers, Panasonic hopes to stick to high-end products with lighter weight and long-life batteries. At the moment, Panasonic is holding up to 24 percent of the sub-12-inch mini notebook computer market in Japan, retaining the top spot for consecutive three years. As demand from the emerging countries like China is rising precipitously and an increasing number of PC makers in on corporate users in China.
  • TriGem Computer Inc. will market the machines under the Averatec brand. The AVN0270N notebook will have a 10.2-inch display and a 160-gigabyte hard-disk drive. Pricing will be open, but it is expected to retail for 59,800 yen (US$568). The AVA8270N desktop will come with an 18.4-inch LCD monitor and a power-saving Intel Corp. (NASDAQ:INTC) processor. It is expected to sell for around 69,800 yen (US$663). The computers will be sold through electronics mass merchandisers from mid-October and also offered via TriGem's online sales site. The company is aiming for combined sales of 20,000 units by the end of 2008.


  • Research In Motion (RIMM) will sell its high-end BlackBerry Bold in Japan through No.1 carrier NTT DoCoMo (NYSE:DCM) from early 2009. RIM is betting that new product launches around the world will help it raise its global market share even though initial costs will eat into its gross margins. The company sees a big opportunity in the absolutely huge Japanese market and necessary technologies to support RIM's products are already in place. The Bold is RIM's most advanced smartphone to date and is the first BlackBerry to support high-speed HSDPA cellular networks. It comes with integrated GPS, Wi-Fi and a host of multimedia features. DoCoMo is already selling BlackBerry in Japan. Its introduction of the Bold is part of its plan to almost double its smartphone line-up to 10 by next year to tap growing demand for phones with computer-like capabilities.


  • Genesis Technology Inc., a large independent semiconductor testing house, filed for court protection from creditors, hit by a drop-off in spending by chipmakers as the economy slows. GTI, whose main clients include Toshiba Corp. (OTCPK:TOSBF) and Sony Corp. (NYSE:SNE), folded with liabilities of 11.3 billion yen (US$106.0 million), a casualty of the tough times facing clients making semiconductors used to run flat TV displays. GTI's failure suggests that the credit crunch is spreading beyond the struggling real estate and construction sector, which has accounted for 10 of the 16 bankruptcies of listed Japanese companies so far this year. GCA Savvian will advise GTI, whose net loss deepened eight-fold in the year ended in March to 4.9 billion yen (US$46.5 million).


  • Yahoo! (NASDAQ:YHOO) Japan Corp. and So-net Entertainment Corp. have formed an alliance in the field of internet services. So-net will use Yahoo as the search service for its portal web site, replacing "goo," which is operated by NTT Resonant Inc. Yahoo will display search-linked ads on So-net sites, with the two companies splitting the revenue. So-net will provide links on its female-oriented sites to products Yahoo! is selling, starting from October 1, 2008 with its Cara Carina web site. Yahoo will pay So-net a fee for each product sold via the So-net sites. Registered Yahoo! members will be able to use their Yahoo! IDs for some So-net services. Starting in November, the two companies will share information for their television program information services. So-net will introduce Yahoo!'s method of account settlement for internet sales.
  • Yahoo Japan Corp. posted profit and sales gains for its fiscal year ended in March. Net income for Yahoo Japan rose to 62.6 billion yen (US$624.9 million), from 57.9 billion yen (US$450 million) in the previous year. Meanwhile net sales rose to 262 billion yen (US$2.5 billion) from 212.6 billion yen (US$2 billion). Yahoo did not include Yahoo Japan's annual results in its own annual report filed in February, because the holding's fiscal year hadn't yet ended. Yahoo Japan’s results contrast with those posted recently by its parent, which has struggled to compete with Google (NASDAQ:GOOG) while fending off an unsolicited acquisition bid from Microsoft Corp. (NASDAQ:MSFT).
  • Atsushi Kunishige, executive vice president of online shopping mall operator Rakuten Inc., has assumed its presidency following an equity-based capital increase deal. eBank President Taiichi Matsuo, who founded the online bank in July 2001, assumed the post of vice chairman without representative rights. The bank completed the 19.9 billion yen (US$189 million) recapitalization the same day, when it floated and sold preferred shares of the same amount to Rakuten under a thirdparty share allotment scheme. If Rakuten converts all of the preferred shares into common shares, its equity stake in eBank would shoot up to more than 40 percent, making it the bank's top shareholder.