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Matthew Burlage is the founder and Chief Executive Officer of IRG and has primary responsibility for the firm’s strategy and financial advisory business across the Asia Pacific region, including Japan. Matt is also responsible for the firm's proprietary investments. Matt has spent the last... More
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  • IRG Technology, Media and Telecommunications Weekly Market Review (Week of 29 Aug – 4 Sept 2011)
    Japan

    Telecommunications

    •         Softbank announced that it was selling its holdings in Yahoo! to Citibank in repayment of a 2004 loan. Softbank currently owns around four percent of Yahoo! Softbank said that the transaction will have no effect on the current co-operation between Yahoo! and Softbank, which also owns more than 40 percent of the independently managed Yahoo! Japan. After the transaction, Softbank will not only pay down its debts to Citibank but will also pocket a profit of approximately 76.4 billion yen ($1 billion).

    •         NTT Data Corp. has launched an initiative to fund R&D projects at overseas subsidiaries. The NTT group member will invest a total of 100 million yen (US$1.3 million) to support six projects, selected from among 32 proposals, through the end of March 2012. It expects this R&D effort to boost sales by 3 billion yen (US$39 million) over the next five years. A project to standardize methodologies for developing and implementing enterprise resource planning systems is among the six selected by a team of NTT Data technology development headquarters staffers and engineering executives at foreign units. U.S. subsidiary NTT Data AgileNet LLC will serve as secretariat of the projects.

    Hardware

    •         Sony, Hitachi, and Toshiba have agreed to merge their small and medium-size display businesses into a joint venture that will have a government-backed investment company, Innovation Network Corporation of Japan, as the largest shareholder. The move comes as Japan tries to protect its companies from the rising Yen and competition from other Asian players. INCJ, Hitachi, Sony, and Toshiba have signed a non-binding Memorandum of Understanding to integrate their display businesses, currently operated by subsidiaries, in a new company to be established and operated by INCJ. The display companies make LCDs including ones using TFT technology that are used in computing devices and television sets. All of the issued shares of subsidiaries Hitachi Displays, Sony Mobile Display and Toshiba Mobile Display and other assets are to be transferred to the new company which is to be called Japan Display. INCJ, which provides financial, technological, and management support for next-generation businesses, plans to invest 200 billion yen (US$2.6 billion) in the joint venture in exchange for shares to be newly issued by it as a third-party allotment, the companies said.

    •         Hitachi Kokusai Electric said its sales in its video and wireless network segment drop by 24 percent in the first quarter ended 30 June. Sales in the segment totaled 12.40 billion yen (US$161 million). The operating loss for the video and wireless network segment widened to 2.26 billion yen (US$29 million). Net sales for the whole company went up 7 percent to 30.82 billion yen (US$401 million) and the company moved to a net profit of 184 million yen (US$2.4 million).

     

    Korea

    Telecommunications

    •         KT is investing 4 billion won (US$3.7 million) in a fund to boost the development of applications. The Econovation Fund for the Active Development of Superior Applications follows the company's Econovation Application Developer Competition, Smart School for education app developers, the Global Frontier app development project, and OASIS, a programme for supporting application developers' advancement into the global market.

    •         SK Telecom Co. has been awarded a license to operate services using the 1.8 GHz spectrum in South Korea after placing a bid of 995 billion won (US$934 million) in an auction for the bandwidth. SK outbid KT which said separately it acquired a license for the 800 megahertz spectrum for 261 billion won (US$245 million). KT already has a license to operate using 1.8 GHz bandwidth. Offering services over high-speed networks is seen as a key development for South Korea's cellphone operators. SK Telecom and KT both bid for the 1.8 GHz spectrum, which was being auctioned by the Korea Communications Commission telecommunication regulator.

    Hardware

    •         LG Electronics Inc. aims to raise its market share for 3-D TVs fivefold this year by pushing its technology for lightweight, battery-free glasses. The company will reach 20 percent of the market for the devices by the end of 2011, up from 4 percent at the beginning of the year, said Lee Kwan Sup, head of marketing for LG’s home entertainment unit. LG aims to pass Samsung Electronics Co. and become the world’s top seller of 3-D televisions next year. LG and competitors including Samsung and Toshiba are pushing 3-D to revive falling demand in major markets. TV shipments will decline through 2015 in Western Europe and Japan and stagnate in the U.S., market researcher IMS Research said. The market will total about 200 million TVs this year, with 3-D accounting for some 10 percent, from 1 percent last year. Sony Corp. cut the sales forecast for its Bravia televisions by 19 percent to 22 million units worldwide this year. Royal Philips Electronics NV said in April it would divest its 80-year-old TV unit to a Hong Kong contract manufacturer.

      China

    Internet

    •         Dell announced that it will partner with China's top search engine Baidu to develop tablet computers and mobile handsets. Baidu declined to comment.  Baidu launched a mobile software platform recently that would be a prelude to an operating system.

    •         Sina Corp. has paid US$66.4 million to acquire a 9 percent stake in Chinese online video company Tudou Holdings Ltd., as the Internet portal operator looks to boost its advertisement revenue from video content. Intensifying competition in China's online video market is pushing up licensing costs for video content and making it harder to retain users, leading executives to predict consolidation in the industry. However portal operators, including companies like Sohu.com Inc. as well as Sina, are looking to video ads as a new potential growth driver. Sina bought about 1.08 million of Tudou's American depositary shares in connection with the company's initial public offering this month, and between Aug. 17-Aug. 25 Sina bought about 1.49 million more ADS for US$35.2 million.

    •         Tencent-invested business-to-consumer e-commerce footwear retailer Okbuy.com is in talks with venture capital and private equity firms with hopes to raise over US$50 million in pre-IPO financing, Sohu reports citing company CEO Li Shubin. The site will start building its logistics capabilities in the fourth quarter, first focusing on Beijing, Shanghai, Guangzhou and Chengdu.  The site completed third-round financing in June, with Tencent investing US$50 million and is targeted to go IPO at end of 2012.

    •         360buy.com has ended its cooperation with online payment services provider Alipay.com as of 24 August, reports China Tech News. According to 360buy.com, the reason for its termination of the cooperation with Alipay.com is the service fees charged by the latter are too high. These are four times higher than 99bill.com, another Chinese internet payment service provider. 360buy.com said that from now on users will not be able to login to 360buy.com or pay for their orders with their Alipay accounts.

    Telecommunications

    ·             China Telecom Europe confirmed its plan to switch on its latest fibre cable linking Europe and Asia before the end of the year. The cable system has been in the works since July 2010, and will expand the company's Euro-Asia Network Solution, becoming the fourth of its terrestrial routes to span the two continents. CTE's three other fibre networks include the Transit Europe-Asia (TEA) cable built in partnership with Rostelecom; the China-Russia 2 in partnership with Transtelecom; and the Transit-Mongolia cable that connects Beijing to the other two systems. The fourth cable will connect China to the TEA and CR2 fibre links via Kazakhstan, forming what CTE refers to as an Information Silk Road, enabling the operator to support the latest-generation of IP services on behalf of its enterprise and telecoms customers either based in the region, or eyeing potential growth opportunities there.

    •         ZTE Corporation announced a 21.52 percent increase in operating revenue to 37.34 billion yuan (US$5.8 billion) for the six months ended June 30, 2011. Based on HKFRS, interim net profit declined 12.3 percent to 769 million yuan (US$120.4 million).  Applying PRC ASBEs, operating revenue for the first half also grew 21.52 percent to 37.34 billion yuan (US$58 billion). Net profit declined 12.3 percent to 769 million yuan (US$120 million). In China, the Group had operating revenue to 16.53 billion yuan (US$2.6 billion), accounting for 44.3 percent of the Group's total operating revenue for the first half. Although there was a slowdown in overall investments in the domestic telecommunications industry, the Group ensured growth in operating revenue by improving the competitiveness of its products and by expanding the market share for wireless, data communication, terminal and other products. Strength from the international market was the key driver for the rapid growth in the first half of 2011.

    •         China Comservice’s first half net profit increase 16.3 percent to 1.05 billion yuan (US$164 million). Revenues went up 16 percent to 25.19 billion yuan (US$3.9 billion). Revenues from telecommunications infrastructure services were 12.19 billion yuan (US$1.9 billion), up 17.7 percent and accounting for 48.4 percent of total revenues, as revenues from business process outsourcing were 10.48 billion yuan (US$1.6 billion), up 13.2 percent and accounting for 41.6 percent of total revenues. Furthermore, revenues from applications, content and other services rose by 19.6 percent and totaled 2.52 billion yuan (US$394 million), representing 10 percent of total revenues. Gross profit totaled 3.95 billion yuan (US$618 million), up 17.3 percent. The company continued to optimize its revenue structure and cost management, which helped to improve the gross profit margin to 15.7 percent from 15.5 percent in H1 2010.

    •         Huawei Technologies expects to see a strong growth in its Southeast Asia business as mobile operators across Southeast Asia upgrade their networks to HSPA and LTE. The ten markets, namely Hong Kong, Macau, Taiwan, the Philippines, Thailand, Cambodia, Vietnam, Laos, Myanmar, and Sri Lanka are seen to generate revenues of over US$1.39 billion for the company this year, Telecomasia.net reports citing Yang Shu, Huawei's President and CEO for Southeast Asia region. Last year, Huawei recorded Southeast Asia revenues of US$1.34 billion, up 17.7 percent year-on-year and accounting for 8 to 10 percent of the company's total revenues.

    •         A court in China sentenced a top official working with the country's leading telecom operator to death with two years' probation for accepting bribes of over US$2 million. Li Hua, former chairman and general manager of the China Mobile Communications Corporation's Sichuan branch, was convicted on the first instance of taking bribes totaling 16.48 million yuan (US$2.58 million), a spokesman with the Intermediate People's Court of Panzhihua City said. The official turned himself in and returned all bribes, which were confiscated and turned over to the state treasury.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Sep 07 5:54 AM | Link | Comment!
  • IRG Technology, Media and Telecommunications Weekly Market Review (Week of 4 – 10 July 2011)
    Japan
    Mobile/ Wireless
    •         Japan ended June with a total of 121.25 million mobile users, after the operators jointly added 521,600 new customers in the month. Softbank again led in subscriber additions as it gained 191,700 new customers, bringing its total customer base to 26.14 million, figures from the Telecommunications Carrier Association (TCA) show. Softbank is followed by NTT Docomo which added 154,000 new customers in June to end the month with 58.41 million subscribers in total. KDDI brought its subscriber base to 33.52 million after attracting 102,200 new customers, and Emobile secured 73,700 new customers to end June with 3.34 million subscribers. PHS services provider Willcom brought its base to 3.99 million as it gained 54,000 new customers and Wimax services provider UQ Communications signed-up 60,100 new customers to bring its total to 1.03 million.
    •         Smartphones comprised 54.4 percent of monthly mobile phone sales at consumer electronics volume retailers on a unit basis in Japan in June, exceeding the 50 percent mark for the first time, according to GfK Marketing Services Japan. NTT Docomo and other mobile phone companies began building up smartphone offerings at the end of last year. Such devices accounted for about half of the new mobile phone models launched by Docomo and KDDI in June. Mass retailers of consumer electronics make up about 30 percent of total mobile phone sales. Their proportion of smartphone sales, however, is believed to be higher than other mobile phone sales agents. As a result, smartphones sales by all vendors are believed to be less than 50 percent of the total mobile phone market. Domestic smartphone shipments in fiscal this year are expected to surge 130 percent on the year to 19.86 million units, or 49 percent of all mobile phones, forecasts MM Research Institute.
    Semiconductors
    •         Sanyo Electric Co. will cut several hundred jobs at its home appliance unit by reassigning staff and encouraging early retirement. The planned downsizing of the workforce at Sanyo Consumer Electronics Co. comes as Sanyo Electric, a subsidiary of Panasonic Corp., aims to prevent the overlapping of its home appliance business with that of its parent firm, which is accelerating reorganization efforts ahead of the start of a new management structure in January 2012, Kyodo said. The official said the management side has already proposed talks with the firm's labor union over the restructuring plan and will now discuss the details, such as the scale of downsizing and when the personnel reassignments should take place.
    Telecommunications
    •         Nippon Telegraph & Telephone Corp. bought back 57.5 million of its own shares for 223.4 billion yen (US$2.8 billion) outside trading hours. The Japanese phone company completed a stock buyback.
    Internet
    •         Rakuten Inc. is expected to post a group net loss of roughly 33 billion yen (US$408.6 million) for the January-June half, due to extraordinary charges from the sale of its consumer credit business. Rakuten will split off and keep the credit card operations of subsidiary Rakuten KC Co. All other consumer credit operations will be sold to midtier non-bank financial firm J Trust Co. in August. Rakuten has decided to book almost the entire associated loss of around 100 billion yen in the April-June quarter. It is expected to record a capital loss of about 56 billion yen and a goodwill impairment loss of around 14 billion yen (US$172 million) as extraordinary losses. The reduced tax burden from extraordinary losses will probably come to at least 30 billion yen (US$369 million) from the reorganization. Another 5 billion yen (US$61 million)-plus tax reduction will be generated from the sale of shares bought in Tokyo Broadcasting System Holdings Inc., with which it proposed a merger back in 2005. As a result, the net loss will be kept to just over 30 billion yen (US$368 million). Sales are seen rising 10 percent on the year to around 180 billion yen (US$2.2 billion).
     
    Korea
    Internet
    •         Subscribers of voice over Internet protocol service numbered 10.1 million as of June, the Korea Communications Commission said. The figure marks about 20 percent of South Korea's 50 million population. The service, which was first introduced in 2006, offers long-distance calls at rates about 85 percent cheaper than landline phones and international calls that cost only 5 percent of the price for traditional fixed-line telephone service. The popularity of VoIP service began to grow rapidly in 2008, following rate cuts introduced by the government. The VoIP service accounted for 32.2 percent of South Korea's fixed-line phone service in 2010, up from 1.4 percent in 2006, as consumers replaced landline phones with cheaper Internet-based phone service at homes and offices.
    •         South Korea's antitrust watchdog has decided to allow the nation's two leading online market operators to go ahead with their business consolidation, clearing the way for the emergence of an e-commerce giant here. Gmarket Inc. and Internet Auction Co., the nation's No. 1 and No. 2 online marketplaces, applied for the merger with the Fair Trade Commission. The two hold a combined 72 percent of the so-called open market through which retailers sell products via online shopping and operators receive transaction commissions. The decision comes after the FTC gave the green light to eBay's bid to purchase Gmarket in 2009 despite concerns that it could create a monopolistic player. The watchdog granted the approval on the belief that it would have a limited impact on fair market competition given the dynamism in the online marketplace. The combined market share of Gmarket and Auction stood at 86 percent in 2008. eBay entered South Korea's online shopping business by taking over Auction in 2001. Though their combined market share declined over the past few years, concerns remain in place that such a giant player could hamper fair competition and provide a chance for operators to abuse their power over small-sized retailers in pricing and other business polices.
    •         In a recent survey of 743 consumers across the country conducted by the Seoul Metropolitan Government, 68 percent of the respondents partially remembered indirect commercials even after the ending of movies or TV dramas that carried them. Thirty-two percent said they pay attention to indirectly advertised brands or products. In addition, 61 percent positively view indirect advertising as only 14 percent answered negatively. As a reason for giving a positive response, 55 percent said the ads help them understand recent fashion trends and 22.5 percent said viewers do not perceive them as commercials. Nearly 13 percent answered that they can get information about new products. The survey also found TV dramas are the most used media for indirect advertisements at 50 percent, followed by movies (20 percent), and TV shows and entertainment programs (9 percent).
    Semiconductors
    •         Ship building conglomerate STX Group and mobile carrier SK Telecom Co. submitted separate letters of intent to purchase a 15 percent stake in memory-chip maker Hynix Semiconductor Inc. worth approximately US$2.3 billion based on current market prices. Lead creditor Korea Exchange Bank said in a statement creditors will now examine the capability of the bidders to finance the stake purchase. Final bids are due at the end of August and creditors aim to select a preferred bidder and sign a sale contract within the year. The creditors, including banks such as Woori Bank and Shinhan Bank as well as state-run Korea Finance Corp., collectively hold around 88.4 million shares in Hynix, the world's second-largest memory chip maker by revenue. Creditors have been trying for years to sell their shares in Hynix, which they took control of in 2001 following several debt-for-equity swaps after the chip maker nearly collapsed due to weak market conditions. The creditors are making their third attempt in as many years to sell their stake.
    Hardware
    •         LG Electronics revised down its 2011 smartphone sales target to 24 million units from its earlier estimate of around 30 million. LG sold around 10 million Optimus smartphones during the first half and aims to sell around 24 million smartphones by the end of this year, Park said. Optimus is the brand under which LG markets its smartphones. In February, Park told Dow Jones Newswires that the company was targeting to sell as many as 30 million smartphones this year. Park said that the company will sell around 114 million units of handsets globally this year, which is also lower than his earlier estimate of around 150 million units. LG sold 116.6 million cellphones last year. LG will launch a three-dimensional compatible smartphone, dubbed as Optimus 3D, in South Korea, starting in the second half of the year, which will be sold through SK Telecom, the country's largest mobile operator.
    •         At least 3 million units of the Samsung Electronics's Galaxy S2, which features a lighter and thinner body, and a faster processor than its predecessor, have been sold overseas since it was first launched in Britain in late April, according to the company. The company is making efforts to boost its overseas sales of the Android-based smartphone in a bid to take a bigger slice in the increasingly competitive smartphone markets. The company expects to sell 10 million units of the Galaxy S2 worldwide like its predecessor, the Galaxy S.
    •         Samsung Electronics estimates slightly higher sales for the second quarter and lower operating profit. The company said revenues for the three months to June are expected at 39 trillion won (US$37 billion). Operating profit is expected to decline to 3.70 trillion won (US$3.5 billion). The company did not provide net profit guidance.
    •         LG Electronics Inc. expects to sell 24 million smartphones this year, 20 percent fewer than its earlier target. The reduced sales target may complicate LG's efforts to revive its money-losing mobile business, which is expected to report a fifth straight quarterly loss for the April-June period. LG conducted a sweeping executive reshuffle in October and beefed up its manpower working on mobile software, to better catch up with Apple, its home-country rival Samsung Electronics and Taiwan-based HTC. LG hopes the Optimus 3D smartphone, which will be its flagship smartphone for the rest of the year, will win consumers with its 3-D features. LG will start receiving pre-orders for the Optimus 3D smartphone, before the handset will be exclusively released via South Korea's top mobile carrier, SK Telecom Co.
    Media, Gaming and Entertainment
    •         South Korea will introduce a softer rating system for smartphone and tablet PC games in a bid to stimulate the local mobile game market. Game applications for smartphones and tablet PCs will be exempted from ratings by the Game Rating Board, which assigns ratings to all computer and video games before they are published in South Korea. Under the upcoming revision, game software developers and operators of application market places, such as Google and Apple can classify their games based on their own sets of rules, the ministry added. Market operators are advised to discuss the criteria of classifications with the Game Rating Board, which is a government agency. Mobile game applications listed under the game category of the Android market and the App Store are closed off from South Korea's 14 million smartphone users because of a standoff between the U.S. companies, which are trying to not have applications censored by the Korean agency, and the Game Rating Board, which has been sticking to its rating system.
     
    China
    Internet
    •         China's online shopping market transaction value will reach RMB 763.41 billion (US$118 billion) this year, chinanews.com said. The country's online shopper population is expected to increase 30.4 percent year- on- year to 193 million this year. The country's online advertising market was worth 23.5 billion yuan (US$3.6 billion) over the first half of this year, itxinwen.com reported. In comparison, the sector's value over the whole of last year was 32.12 billion yuan (US$4.9 billion).
    •         Microsoft and Baidu will bolster their Internet-search partnership in China as the companies seek to gain users from Google. The agreement will let Baidu users see English search results generated by the Bing technology to users in China, according to Microsoft’s Viola Wang. A service jointly offered by the companies will start this year. Baidu is expanding its main business of Chinese-language search, after fending off Google in China. Microsoft, which is gaining users for Bing in the U.S., is building on its partnership with Baidu after ending a search- engine agreement with China’s Alibaba Group Holdings Ltd. Google accounted for 19.2 percent of China’s search market by revenue in the first quarter, down from 19.6 percent three months earlier, according to research firm Analysis International. Google’s figures include revenue generated from its local sites and international services.
    •         Sina Weibo is China's top product for 2011, according to Nikkei Business Publications Inc. Sina Weibo has 140 million registered users. Not only does that give the site a large share of the estimated 477 million Internet users in China, but its impact on consumer spending has also been significant as word-of-mouth advertising through posts on the site have helped spawn hit products. iPhone smartphone ranked second, followed by tuangou, or group-acquiring services. That the top three spots are all occupied by Internet-related products and services speaks to the country's rapid adoption of that medium. Products and services were ranked on points awarded in categories such as sales growth, novelty and effect on lifestyle based on a survey of Chinese consumers to gauge purchasing trends.
    •         NTT DoCoMo and Baidu agreed to set up a joint venture to distribute games and other mobile phone content in China. Baidu will hold 80 percent of the joint venture and DoCoMo will hold 20 percent. DoCoMo said its investment will amount to about 2 billion yen (US$24.6 million). Baidu spokesman Kaiser Kuo confirmed the plans for a joint venture, but declined to comment on what type of products the joint venture might produce, saying the company doesn't discuss unreleased products. Demand for mobile content in China, where smartphones are increasingly popular, is expected to surge in the coming years. Content to be distributed by the joint venture will include Japanese games, animation and comic books.
    •         Baidu has reached a strategic partnership with digital TV operator WASU Digital TV Media Group to cooperate on providing interactive TV and IPTV services, qq.com reported. Baidu will contribute key applications including search, Q&A and Baidu Images, as well as its maps and music services to Wasu's digital TV set-top box-based and IPTV broadcasting platforms, allowing users to search on Baidu using their TV remotes, according to the report. The service is expected to be rolled out in at least 100 cities in the near future, said the report.
    •         China has established a 5 billion yuan (US$773 million) fund to support the development of Internet of Things (IOT) applications. The fund will be distributed over five years, the China Securities Journal writes and the Ministry of Industry and Information Technology (MIIT) has already selected at least 100 qualified companies from over 600 companies who submitted their applications. More applicants will be selected in the future.
    •         Alibaba Group is developing a smartphone with domestic mobile phone producer Beijing Tianyu Communication Equipment, Beijing Morning Post cited. The product will feature Alibaba's in-house developed operating system, browser, instant messaging service, online payment tool and applications related to its e-commerce site Taobao.com. The phone might be launched this year.
    •         meituan.com has completed second-round financing of US$50 million with investors including Alibaba Group, Northern Light Venture Capital and Sequoia Capital, qq.com reported citing company founder and vice president Wang Huiwen. The site targets sales of 1.6 billion yuan (US$247 million) this year. The site received first-round funding of US$20 million from Sequoia Capital in October 2010.
    •         Tencent Holdings Ltd. will acquire a 15.7 percent stake in Kingsoft Corp. for HK$892 million (US$115 million) to expand in computer-security services. Tencent will acquire 111.5 million shares from Kingsoft Chief Executive Officer Kau Pak Kwan and 66.9 million shares from non- Executive Director Cheung Shuen Lung, Kingsoft said. The deal is scheduled will be completed. The purchase builds on Tencent’s leadership in China’s online-games and instant-messaging markets as the Shenzhen-based company boosts spending on services including computer security and electronic commerce. Kingsoft and Tencent together account for at least 20 percent of the local market for security software, second only to Qihoo 360 Technology Co., according to Morgan Stanley.
    Telecommunications
    •         China Mobile had recorded 65.85 million registered users of its mobile number-based microblogging and social networking community shequ.10086.cn by the end of May posting up to 2 million entries daily, Sohu reported. The service has active users of 14.8 million every month, Hang said. By the end of May, the company's mobile applications store Mobile Market had registered users of 76.96 million and monthly downloads up to 100 million.
    •         Chunghwa Telecom is setting up a new subsidiary in China. The subsidiary will take the form of a joint venture through an overseas holding company, with Chunghwa Telecom investing up to TWD 51 million (US$1.7 million). The unit will focus on ICT services; further details were not released.
    •         China Telecom has contracted Alcatel-Lucent to help it meet its goal of passing 100 million households with fiber by 2015. Alcatel-Lucent Shanghai Bell - the vendor's Chinese subsidiary - will provide access management equipment for China Telecom's Broadband China, Fiber Cities project. The initiative aims to combine PON technologies with remote nodes connected via existing copper wires. China Telecom said it will pass 26 million homes with high-speed broadband this year, deploy optical networks in all China's cities within three years, and have 30 million FTTH subscribers by 2015. Alcatel-Lucent Shanghai Bell simultaneously announced it had won a deal to upgrade China Telecom's networks in five provinces with IMS. The contract involves implementing IMS in Shanghai, Shandong, Jiangsu, Zhejiang, Xinjiang and Sichuan. The operator has followed up on trials of the technology in Shanghai and Shandong with plans for what it says is its first major deployment of the technology.
    •         Huawei Technologies Co. might ship about 20 million smartphones using Google's Android operating system this year, above its initial target of up to 15 million units, Victor Xu, chief marketing officer for Huawei's devices business said. Huawei might ship over 60 million mobile phones this year and about 170 million units including all devices, he said on the sidelines of a news briefing. Revenue from Huawei's devices business might rise by about 40 percent from last year to at least US$6 billion this year.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jul 13 10:28 PM | Link | Comment!
  • IRG Technology, Media and Telecommunications Weekly Market Review (Week of 27 Jun – 3 Jul 2011)
    Japan
    Telecommunications
    •         Softbank will refinance 550 billion yen (US$6.8 billion) in debt from its mobile phone business acquisition, reports The Nikkei. Softbank intends to pay off the debt using cash on hand and 550 billion yen (US$6.8 billion) from an uncollateralized syndicated loan it is negotiating with twenty lenders. Mizuho Corporate Bank will be the lead manager and the syndicate will likely include Sumitomo Mitsui Banking and Deutsche Bank. The interest rate will be in the 1 percent level and the loan will carry a repayment period of over three years. The refinancing will slash Softbank's interest payments by 10-20 billion yen (US$124-247 million) a year. The current debt bears an interest rate of 5 percent-plus and must be repaid within thirteen years. Softbank aims to eliminate interest-bearing liabilities on a net basis by the end of March 2015.
    Hardware
    •         The electronics industry is expected to recover from the earthquake in Japan by the end of the third quarter, coinciding with the peak season for electronics and semiconductor sales, according to IHS iSuppli data. Some companies already have recovered from the March 11 quake. Among the most resilient was Fujitsu which had restored its production to pre-disaster levels at five chip plants, due to a disaster-response strategy implemented three years ago following a prior quake. iSuppli said 14 semiconductor suppliers and four silicon wafer makers in Japan were affected by the quake. The industry's automotive electronics segment was hardest hit, as the nation produces nearly 32 percent of global segment output. Consumer electronics was next as Japan represents about 45 percent of the global total.
    •         Hitachi Ltd. plans to join Sony Corp. and Toshiba Corp. in talks to merge their small-sized liquid crystal display panel businesses. An LCD panel business merger among the three Japanese electronics makers would create the world's biggest producer of the key component for smartphones and tablet computers. Innovation Network Corporation of Japan, a government-backed investment fund, earlier proposed that Sony and Toshiba merge their small-sized LCD panel businesses, saying it would invest in a merged entity should the two firms reach agreement. Japan's LCD panel makers have been scrambling to compete with their South Korean and Taiwanese rivals, which dominate the market for larger panels used in televisions. To stay competitive, Japanese players are focusing more on smaller panels used in smartphones and tablets, a booming market segment where Japan believes it still has a technological advantage.
     
    Korea
    Telecommunications
    •         SK Telecom Co. will launch its super-fast next-generation wireless network in Seoul, seeking a greater share of South Korea's data service market, and plans to sharply increase its investment in the new network technology. The nation's largest mobile carrier by subscribers will offer a 4G network that runs on LTE technology, which enables an ultra high-speed data service that would allow users to download large-sized video content in minutes without the interruptions of earlier generation technologies. South Korean mobile operators have been using advanced network technology, WiBro or WiMax, and the increasing global demand for smartphones and tablet computing devices has pushed the mobile carrier to deploy more sophisticated networks so they can offer higher speed data services.
    Semiconductors
    •         Samsung Electronics Co. expects the global memory chip market to remain flat throughout this year. The conglomerate said Samsung Electronics will fold its flat-panel display business back into its semiconductor business, uniting its component manufacturing operations.
    Information Technology
    •         South Korea will digitize all school textbooks by 2015 in a bid to help students create their own study patterns and lighten their backpacks. Under the plan, which requires 2.23 trillion won (US$2.07 billion) from the state budget, all schools will be fitted with an internet-based computing system known as cloud computing by 2015, according to a report submitted to President Lee Myung-supported by the Ministry of Education, Science and Technology and the President's Council on Informatization Strategies. Cloud computing allows users to share conventional computer resources, including software, information and online connections, through mobile devices such as smartphones without having to carry laptops or personal computers. The government hopes that the new educational tool will help students establish their own study patterns based on individual needs by giving them online access to their lessons and other educational resources. Digital textbooks are also expected to remove the physical burden of carrying heavy paper textbooks, which will remain in use for the time being, as well as the financial burden of purchasing them.
     
    China
    Internet
    •         Renren.com's group shopping site Nuomi.com has partnered with digital out-of-home advertiser Focus Media to advertise its deals via Focus Media's interactive adverting and location-based services networks, 163.com cited. The site will also partner with online travel site eLong on travel-related deals, as well as collaborating with e-commerce site vipshop.com on luxury goods deals. The site has linked its accounts with the Renren SNS site and will expand into Taiwan.
    •         Baidu Inc. has reached an agreement to invest US$306 million in Chinese Internet travel site operator Qunar.com Information Technology Co. The move comes as Baidu is aggressively expanding its product offerings, including investments in online video and e-commerce ventures, as Chinese Internet companies increasingly compete in each others' niches. Companies such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. are working on their own search technology to compete with the search giant. Tencent has also recently made an investment in online travel company eLong Inc, in which Expedia Inc. also owns a stake. Qunar provides a search engine airline, train, hotel, and tour packages, and also offers group-buying deals and user discussion forums on its website. According to research firm iResearch, Qunar was the top-ranked travel site in March among Chinese web surfers, measured by daily unique visitors. It tracks 11,000 air routes and 102,000 hotels globally, according to a joint statement about the investment.
    •         Youku.com Inc. launched its paid-content platform with Warner Bros. Home Entertainment Group's joint venture in China, expanding its offerings of new releases and other titles to its library, sending its American Depositary Shares higher. The online television company, which allows users to upload video, launched the service in October. It said it has processed 200,000 paid transactions for its library, which includes more than 300 movies. Youku, which went public in December, generated the best first-day pop for a U.S. initial public offering in more than five years at the time. The company's ADS were up 7 percent at US$29.20 in recent premarket trading. They have more than doubled since their IPO.
    •         Baidu has acquired a 29 percent stake in Beijing Leftbrain Network Technology for 3.1 million yuan (US$479, 468), making it the second largest shareholder in the mobile phone and auto information sites operator. The company had total assets worth 11.59 million yuan (US$1.8 million) by the end of 2010, and had a net profit of 569,000 yuan (US$88,005) in 2010.
    •         Youku, Tudou and Sohu Video were the top three companies on China's online video market in terms of revenue, according to Analysis International. Youku had a 21.5 percent share of revenues, followed by Tudou with a 16.2 percent share, and Sohu Video with a 13.1 percent share of revenues. The sequential drop of advertising revenue is attributed to seasonal variation and ad spending was mostly on TV in the quarter.
    •         Domestic online video sites are now spending 500,000 yuan (US$77,333) to 600,000 yuan (US$92,800) per episode in licensing popular TV drama series, compared with around RMB 200,000 (US$30,933) at the beginning of the year, Beijing Morning Post reported, citing discussions at the sidelines of the Shanghai TV Festival. At least six TV series have brought in an online licensing fee of at least 20 million yuan (US$3.09 million) so far this year, with Sohu's online video unit spending on a 97-episode series by Hunan Satellite Television estimated at around 30 million yuan (US$4.6 million).
    •         Alibaba Group has established a RMB 200 million (US$30 million) small loans subsidiary in Chongqing, Southern Metropolitan News cited. Alibaba holds a 70 percent stake in the company, as three other companies, Fosun Group, Intime Department Store and Wanxiang Group, hold 10 percent each. The lender will offer loans of up to 500,000 yuan (US$77,333) to vendors on any of Alibaba’s four e-commerce platforms.
    Mobile/Wireless
    •         According to research commissioned by the Broadband Forum, China’s IPTV user base grew 55 percent year-on-year to reach 9.83 million in Q1. This figure is just one million away from France’s 10.6 million. Although Europe remains the largest region for IPTV with over 21 million subscribers, Asia is fast gaining ground with 18 million users. Taiwan made the Top 10 chart for the first time with 850,000 users, as South Korea and Japan, which stood at third and fourth place, had 3.98 million and 2.87 million users respectively. The global figure for IPTV now stands at 48.2 million. The technology enjoyed 34 percent year-on-year growth globally, and 1.4 million of the 2.9 million new subscribers added in Q1 hailed from Asia. Broadband Forum CEO Robin Mersh said Asia’s positive showing for IPTV was coupled with healthy broadband growth for the region. Asia remains the fastest growing broadband region, with a 16.21 percent increase over last year. Subscribers in Asia now comprise 42 percent of the global total, up from 40 percent last year. The first three months of the year saw 42 percent of global net additions come from China, Hong Kong and Macau.
     
    Telecommunications
    •         The Chinese subsidiary of South Korean conglomerate SK Group is aiming to post 86 billion yuan (US$13.3 billion) in annual sales by 2015 by continuously seeking new business opportunities. SK China Co. said it will seek to expand its sales by an annual rate of 30 percent during the 2011-2015 period. The company logged sales of 23 billion yuan during the six months following its launch. SK China said the company's investment in China will amount to US$14.6 billion over the next 10 years, which will be mostly put in energy and ICT sectors. SK China signed a memorandum of understanding last year with China Energy Conservation and Environmental Protection Group, a company actively engaged in the energy conservation, emissions reduction and environment protection sectors. SK China set up a joint venture in the southern Chinese city of Shenzhen to extend the range of its business to include integrated chips, software and other mobile communications solutions.
    •         China Mobile has signed a strategic co-operation agreement with state-owned broadcaster China Central Television (CCTV) to establish a joint China Mobile TV Station, cctime.com reported. The two will offer mobile TV programs, mobile video content and advertising solutions via the station.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jul 07 1:37 AM | Link | Comment!
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