Hardware

• With a stronger yen and sluggish sales of copiers and laser printers, Canon's (CAJ) quarterly operating profit might be halved from the previous year despite brisk sales of its recently launched EOS Kiss X3 camera and cost cuts. But reports said that Canon is unlikely to change its annual forecast despite having to grapple with a stronger yen than it first estimated. The company will gain 60 billion yen (US$657 million) in July-September. Canon has forecast a 60 percent fall in annual operating profit to 190 billion yen (US$2.1 billion).

Media, Entertainment and Gaming

• Nintendo Co. (NTDOY.PK) might reduce its earnings forecast. Annual profit will lessen for the first time in six years due to the fall of Wii console sales and stronger yen. Net income at Nintendo might lessen 11 percent to 249.3 billion yen (US$2.7 billion) this fiscal year, the first drop since the 12 months ended March 2004. The company lowered the price of Wii’s in September. Nintendo had 300 billion yen (US$3.3 billion) net income this year. Global sales of the Wii fell for the first time. Sony Corp. (SNE) sold the fewest number of PlayStation 3 machines in two years.

Telecommunications

• Apple: What recession? Apple (AAPL) customers continued to buy up iPhones and Mac computers, seemingly ignoring the recession and helping the company's Q4 results shine. "We are thrilled to have sold more Macs and iPhones than in any previous quarter," Steve Jobs said. Apple easily exceeded analysts' Q4 earnings expectations as back-to-school promotions drove sales: revenue grew 25% to $9.87B versus last year's quarter, while net income surged 47% to $1.67B (see more numbers below). Apple shares rose 7.2% to $203.43 in after-hours trading; the stock has more than doubled this year. Read Apple's earnings call.
• Lehman's Europe unit readies $90B claim. Lehman's European arm, now managed by PricewaterhouseCoopers, is preparing a new $90B claim against the U.S. parent of the failed bank - bringing the unit's total claims against various Lehman entities globally to $208B. PwC fees for managing the wind-down so far: €168M ($253M).
• Icahn targets CIT. Corporate raider Carl Icahn turned up the heat on CIT Group (CIT) Monday, slamming the company for unfairly favoring large bondholders with its revised debt exchange offer and saying he was prepared to offer a better deal by lending the company $6B and saving it $150M in fees. In a letter to CIT's board, Icahn said the proposed alternative $6B loan package is "the latest example of incompetent and unconscionable behavior" from CIT's board. Prospective lenders, he says, would get well in excess of what the current syndicated loan market should dictate, in exchange for voting their debt in favor of the company's reorganization plan.
• Morgan confirms Van Kampen sale to Invesco. Morgan Stanley (MS) confirmed Monday that it's selling its retail asset-management business, including the Van Kampen fund unit, to Invesco (IVZ), for $1.5B in stock and cash, including a 9.4% stake in Invesco. "By taking a minority interest in Invesco, Morgan Stanley will be able to realize significant value in partnership with a world-class player," co-president James Gorman said. The deal, rumored for months and expected to close in mid-2010, will remove some sales limits that Van Kampen managers faced since Morgan's JV with Smith Barney closed.
• Bernanke warns U.S., Asia to mind the gap. Fed chairman Ben Bernanke called on U.S. and Asian leaders to "avoid ever-increasing and unsustainable imbalances in trade and capital flows," saying the U.S. financial system is currently "overwhelmed" by an inflow of capital. Speaking Monday at a San Fran. Fed conference on Asia, Bernanke warned that while the U.S. trade deficits with developing countries are not as onerous as they were two years ago, they are still a threat to the global economy. World leaders believe global economic growth must begin to depend less on the U.S. consumer.
• Fed tests exit tool... As global central banks begin to weigh inflation risks, the Fed confirmed Monday it has begun experimenting with "triparty" reverse repo agreements, but says their actual use is not imminent. In a reverse repo, the Fed pledges mortgage-backed securities and Treasurys it bought as collateral for short-term loans, thereby draining cash from the financial system. Reverse repos are normally the domain of the 18 primary dealers; the experiment involves extending that to deals with the $2.5T money-market mutual fund business.
• ... while Australia says inflation risk looms. The Reserve Bank of Australia believes that the risk to global economic growth is passing, and that the bigger threat is now inflation. "Keeping interest rates at very low levels for an extended period could therefore threaten the achievement of the inflation target over the medium term," according to minutes from its Oct. 6 meeting, released Tuesday. At the meeting, the RBA unexpectedly raised its policy rate by 0.25% to 3.25% - its first such hike since March 2008, and the first in a major developed economy since the start of the financial crisis last year.
• Galleon faces massive withdrawals. Clients of hedge-fund giant Galleon jumped ship Monday after Friday's arrest of co-founder Raj Rajaratnam, forcing Galleon to unload some of its holdings, including tech stocks. So far, investors have requested $1.3B of the total $3.7B Galleon manages, and two of its brokerage firms - Bank of America (BAC) and Barclays (BCS) - have cut off relations with the firm. In a letter to investors and employees Monday evening, Rajaratnam said the charges "are, without exception, entirely baseless," and vowed to defend the firm.
• Financial sector fraud on the rise. Fraud is increasing twice as fast in the financial sector as in other sectors, according to Kroll's annual Global Fraud Report, released Monday. In a survey, senior executives said North America had been particularly hit hard by the financial crisis: the average financial services company lost over $15M to fraud over the past three years. The report comes as sources say investigators plan to charge 10 more securities dealers with insider trading, some linked to Galleon Group, which is at the center of one of the biggest-ever undercover operations into illegal trading (see above).
• Bair speaks up for small banks. FDIC head Sheila Bair warned Monday small community banks are struggling to compete against their too-big-to-fail rivals. "Too big to fail has become worse," she said, "it's become explicit when it was implicit before." Bair contends government guarantees create competitive disparities between large and small banks, because "everybody knows small institutions can fail," making it more expensive for them to raise capital and secure funding.
• China fires new salvo in trade tussle. In the latest in a series of China-U.S. trade disputes, China's Ministry of Commerce took preliminary measures Monday to impose tariffs of as much as 36% on certain nylon imports from the U.S., saying the imports have damaged the domestic industry. The ruling affects imports of Nylon 6, used to manufacture a variety of products, including toothpaste and chiffon. Affected U.S. firms include BASF's (BASFY.PK) U.S. arm and Honeywell (HON).
• Group support for Microsoft/Yahoo tie-up. In an open letter, advertising industry heavyweights urged the Department of Justice to fast-track approval of a Microsoft (MSFT) / Yahoo (YHOO) tie-up, saying the potential benefits for advertisers, marketing services agencies, Web site publishers and consumers are "too important to wait for." Google (GOOG) remained more circumspect, perhaps because it doesn’t want to alienate customers.

Earnings: Before Open

• Autoliv (ALV): Q3 EPS of $0.36 beats by $0.08. Revenue of $1.33B (-14.2%) vs. $1.28B. Shares -0.4% premarket. (PR)
• Bank of New York Mellon (BK): Q3 EPS of $0.54 beats by $0.06. Revenue of $3.33B (+3.7%) vs. $3.18B. Provision for credit losses goes to $147M from $61M last quarter. (PR)
• Biogen Idec (BIIB): Q3 EPS of $1.12 beats by $0.08. Revenue of $1.12B (+2.8%) in-line. Shares -1.9% premarket. (PR)
• BlackRock (BLK): Q3 EPS of $2.10 beats by $0.17. Revenue of $1.14B (-13.2%) in-line. "Improving investor sentiment was the most important factor in third quarter results. Clients are putting money back to work in the markets, driving inflows in equities and bonds, and outflows in money market funds industry-wide." Shares +0.9% premarket. (PR)
• Brinker International (EAT): FQ1 EPS of $0.17 beats by $0.02. Revenue of $778M (-20.9%) vs. $766M. Cost of sales fell to 28.2% from 28.4% last quarter. (PR)
• Caterpillar (CAT): Q3 EPS of $0.64 beats by $0.58. Revenue of $7.29B vs. $7.49B. "We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s. We are seeing encouraging signs that indicate a recovery may be underway." Shares +4.4% premarket. (PR)
• China Mobile (CHL): Q3 net profit of 28.6B yuan ($4.2B), up 2.6% from 27.9B last year, short of consensus of 29.2B. Sales rose 9% to 114.1B yuan. Ebitda rose 5% to 57.8B yuan, short of 58.1B consensus. (Bloomberg)
• China Telecom (CHA): Q3 profit of 2.39B yuan ($350M), down from 4.6B last year, and well short of consensus of 3.68B. Ebitda profit margin slipped to 41.1% from 42.3%. (Reuters)
• Coach (COH): FQ1 EPS of $0.44 beats by $0.05. Revenue of $761M (+1.1%) vs. $754M. (PR)
• Coca-Cola (KO): Q3 EPS of $0.82 in-line. Revenue of $8.04B (-4.2%) vs. $8.11B. "We expect the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly.: Shares -1.2% premarket. (PR)
• Comerica (CMA): Q3 EPS of -$0.10 beats by $0.43. $311M provision for loan losses, unchanged from Q2. (PR)
• Diamondrock Hospitality (DRH): Q3 FFO of $0.19 beats by $0.02. Revenue of $138M (-14.6%) vs. $134M. (PR)
• DuPont (DD): Q3 EPS of $0.45 beats by $0.12. Revenue of $5.96B (-18.3%) vs. $6.14B. Sees full-year EPS of $1.95-2.05 vs. $1.83. "We see overall sequential improvement in our industrial businesses as market conditions begin to firm." (PR)
• Forest Laboratories (FRX): FQ2 EPS of $0.85 misses by $0.01. Revenue of $963M (+4%) vs. $1B. (PR)
• Great Atlantic & Pacific Tea Company (GAP): FQ2 EPS of -$1.18 misses by $0.47. Revenue of $2.06B (-5.4%) vs. $2.13B. "The current challenging economy continues to impact our business. The macro headwinds including rising unemployment, intensifying price competition and now also deflation are creating an even more difficult short-term economic environment." Shares -9.7% premarket. (PR)
• Illinois Tool Works (ITW): Q3 EPS of $0.60 beats by $0.07. Revenue of $3.58B (-19.8%) in-line. Operating margin 13.5% up from 9.9% last quarter. (PR)
• Invesco (IVZ): Q3 EPS of $0.24 in-line. Revenue of $706M vs. $687M. Shares +3.6% premarket. IVZ announced yesterday it would acquire Morgan Stanley's (MS) retail asset management business, including Van Kampen Investments." (PR)
• Jefferies Group (JEF): Q3 EPS of $0.42 beats by $0.14. Revenue of $M (+154.5%) in-line. Shares +6.1% premarket. (PR)
• Journal Communications (JRN): Q3 EPS of $0.02 misses by $0.06. Revenue of $105M (-22.9%) vs. $108M. (PR)
• LaBranche (LAB): Q3 EPS of -$0.22 misses by $0.27. Revenue of $M in-line. Shares -4.9% premarket. (PR)
• Lockheed Martin (LMT): Q3 EPS of $2.07 vs. consensus of $1.83. Revenue of $11.06B (+4.5%) vs. $11.4B. (PR)
• Lexmark (LXK): Q3 EPS of $0.65 beats by $0.20. Revenue of $958M (+6%) vs. $901M. Gross margin 32.7% vs. 32.5%. Sees Q4 EPS of $0.50-0.60 vs. $0.47, revenue "up slightly." Stronger than expected customer demand drove better than expected growth. (PR)
• Marshall & Ilsley (MI): Q3 EPS of -$0.68 in-line. Average loans and leases fell 6% to $47.1B. "There are some encouraging early signs that credit quality is improving, but we realize it will take a few more quarters to fully address our problem loans." Announces $775M common stock offering. Shares -10.2% premarket. (PR)
• Parker-Hannifin (PH): FQ1 EPS of $0.45 beats by $0.28. Revenue of $2.24B (-27%) vs. $2.17B. Shares +4.9% premarket. (PR)
• Peabody (BTU): Q3 EPS of $0.49 beats by $0.26. Revenue of $1.67B (+24.6%) vs. $1.42B. Shares +4.2% premarket. (PR)
• Pfizer (PFE): Q3 EPS of $0.51 beats by $0.03. Revenue of $11.62B (-2.9%) vs. $11.41B. Sees full-year EPS of $2.00-2.05 vs. $1.98. (PR)
• Precision Castparts (PCP): FQ2 EPS of $1.54 misses by $0.09. Revenue of $1.3B (-27.6%) vs. $1.4B. "From a top-line perspective, overall sales declines seem to be bottoming out in the second quarter." Shares -3.1% premarket. (PR)
• Regions Financial (RF): Q3 EPS of -$0.37 misses by $0.12. Revenue of $1.62B (-20.3%) vs. $1.58B. Allowance for credit losses +2.9% to $1.025B. Shares +0.35% premarket. (PR)
• Sherwin Williams (SHW): Q3 EPS of $1.51 beats by $0.16. Revenue of $2B (-12%) in-line. Sees Q4 EPS of $0.35-0.55 vs. $0.61, and revenue down 8-12% Y/Y. (PR)
• State Street (STT): Q3 EPS of $1.05 beats by $0.01. Revenue of $2.24B (-19.3%) in-line. Shares -0.75% premarket. (PR)
• UAL (UAUA): Q3 EPS of -$0.43 beats by $0.51. Revenue of $4.43B (-20.3%) in-line. Shares +8.1% premarket. (PR)
• UnitedHealth (UNH): Q3 EPS of $0.89 beats by $0.12. Revenue of $21.7B (+7.6%) vs. $21.56B. (PR)
• United Technologies (UTX): Q3 EPS of $1.14 beats by $0.02. Revenue of $13.38B (-11.3%) in-line. "Order rates for most of our businesses have largely stabilized, although the shape of recovery is still uncertain." (PR)
• Western Union (WU): Q3 EPS of $0.33 beats by $0.01. Revenue of $1.31B (-4.6%) in-line. Says recent stabilization trends are encouraging. (PR)

Earnings: Mon. After Close

• Apple (AAPL): FQ4 EPS of $1.82 beats by $0.40. Sales of $9.87B vs. $9.2B. Sees FQ1 EPS of $1.70-1.87 vs. consensus of $1.91 on sales of $11.3-11.6B, in line. Sold 3.05M Macs, 10.2M iPods, and 7.4M iPhones during quarter. Gross margin 36.6%. Shares +5.9% AH. (PR)
• Atheros Communications (ATHR): Q3 EPS of $0.46 beats by $0.08. Revenue of $157M (+13%) vs. $147M. Shares +2.1% AH. (PR)
• Boston Scientific (BSX): Q3 EPS of $0.19 beats by $0.05. Revenue of $2.03B (+3%) vs. $2.04B. Sees Q4 EPS of $0.17-0.21 vs. $0.17. Expects full-year adjusted EPS of $0.75-0.79 vs. $0.56. Shares -7% AH. (PR)
• JDA Software Group (JDAS): Q3 EPS of $0.40 beats by $0.04. Revenue of $96M (-3%) vs. $92M. Shares -2.8% AH. (PR)
• Lincare (LNCR): Q3 EPS of $0.53 beats by $0.01. Revenue of $393M (-3%) vs. $391M. Shares -0.8% AH. (PR)
• Packaging Corp. of America (PKG): Q3 EPS of $0.25 in-line. Revenue of $554M (-11%) vs. $549M. Sees Q4 EPS of $0.13 vs. $0.17. Shares -7.4% AH. (PR)
• Steel Dynamics (STLD): Q3 EPS of $0.30 beats by $0.07. Revenue of $1.2B (-54%) vs. $1.1B. Shares +2.6% AH. (PR)
• Texas Instruments (TXN): Q3 EPS of $0.42 beats by $0.03. Revenue of $2.9B (-15%) vs. $2.8B. Sees Q4 EPS of $0.42-0.50 vs. $0.40. "Our balance sheet is strong and has allowed us to opportunistically make investments in Analog and Embedded Processing throughout this downturn that should provide returns for years to come." Shares +2% AH. (PR)
• UDR Inc. (UDR): Q3 FFO of $0.31 beats by $0.01. Rental income of $150M (+2%) vs. $149M. Lowers full-year FFO guidance to $1.14-1.20 from $1.23-1.35, vs. consensus of $1.27. Shares -0.5% AH. (PR)
• Volterra Semiconductor (VLTR): Q3 EPS of $0.19 misses by $0.01. Revenue of $29.7M (-3%) in-line. Shares -10.3% AH. (PR)
• Werner (WERN): Q3 EPS of $0.26 beats by $0.06. Revenue of $429M (-27%) vs. $428M. Shares +3.3% AH. (PR)
• Zions Bancorp (ZION): Q3 EPS of -$1.41 misses by $0.17. Revenue of $753M (+29%) vs. $633M. Shares -1.1% AH. (PR)

Today's Markets

Asian markets were mostly higher Tuesday, while Europe stocks were mostly lower. Nasdaq futures are well higher on the strength of Apple's (AAPL) blowout Q4; other indexes are flat.

Hardware

• Oki Data Corp. is initiating full-scale sales of printers in the Chinese market as part of an effort to make up for slumping sales elsewhere overseas. The Oki Electric Industry Co. subsidiary had two overseas sales organizations for printers, one for Europe and the U.S., and one for other foreign countries. It will create a third sales team at its headquarters to oversee sales in China. The new team, which is also slated to cover sales activities in Taiwan, will formulate sales plans and conduct market research. An executive responsible for sales in Japan will be appointed chairman of Oki Trading (Beijing) Co., Oki Data's local unit in Beijing, and management-level personnel will also be sent from Japan to branches in Shanghai and Guangzhou. Oki Trading has begun using endorsements from table tennis player Ai Fukuhara, who is popular there.

The US equity market gave back some more of Monday’s gains with a second day of small losses. At the close in New York, the S&P 500 (1,057.08 -3.53 -0.33%), DJIA (9,712.28 -29.92 -0.31%), and NASDAQ Composite (2,122.42 -1.62 -0.08%) were down.

The Toronto Exchange Composite (11,394.96 -0.03 -0.00%) was unchanged, but the Venture market (1,277.21 +4.90 +0.39%) followed up with another gain.

Hardware

• Nintendo Co. (NTDOY.PK) cut the top-selling Wii’s price for the first time and Sony Corp. (SNE) lowered the cost of buying its PlayStation Portable player in Japan to help revive industry sales. The motion-sensing Wii’s price will fall 20 percent to US$200 in the U.S. The PSP will be 15 percent cheaper in Japan and sell for 16,800 yen (US$185). Nintendo became the last of the three major game-console makers to cut prices as the hardware manufacturers bowed to publishers and retailers, who called for cheaper machines to reverse the industry slump. Global sales of the Wii declined for the first time, while Sony sold the fewest number of PlayStation 3 machines in two years. The price of the Wii, introduced in 2006, will be lowered in Japan and in Europe the following day. Sony’s PSP in Japan will be cheaper than Nintendo’s DSi player.

Hardware

• NEC Corp. (NELTY.PK), Hitachi Ltd. (HIT) and Casio Computer Co. (CSIOY.PK) plan to merge their mobile handset operations. This will create the country's second-largest cellphone maker by shipments after Sharp Corp. (SHCAY.PK). The Japanese cellphone makers aim to boost profitability by consolidating operations to save money in a domestic market nearing saturation. A consolidation of the three players would help lessen their spending on development costs and ride out the tough local market. This would also trigger an expansion overseas. That prospect encouraged the investors to snap up shares in the three companies.

Hardware

• Sony Corp. (SNE) cut the price of its PlayStation 3 console by 25 percent, bowing to demands from game publishers and increasing the pressure on industry leader Nintendo (NTDOY.PK) to follow. PlayStation 3's price will be US$299 in the U.S., with comparable reductions in Europe and Japan. Nintendo offers the Wii for US$250 and Microsoft Corp (MSFT) sells its Xbox 360 machine for as little as US$200. Sony chairman Howard Stringer, who rebuffed calls for cheaper prices as recently as last month, reversed course after PS3 sales tumbled to a two-year low. Sales of Nintendo's market-leading Wii dropped for the first time last quarter as the global recession drove down consumer spending.

• China.com’s (CHINA)revenue was down 31 percent year-over-year but up 27 percent quarter-over-quarters. Net profit was HK$0.6 million (US$.09 million) in the period and a net profit of HK$14.6 million (US$2.1 million) in the year-ago period. The company’s revenue was HK$42.64 million (US$6.2 million) and loss HK$5.49 million (US$803207) in the first six months.
• ChinaCast Education Corp. (CAST) entered into a definitive agreement to purchase the remaining 20 percent interest in The Foreign Trade and Business College of Chongqing Normal University for US$17.6 million. The Company will pay an additional US$2.3 million for a one-time profit distribution bringing the total purchase price to US$19.9 million. ChinaCast attained the acquisition of 80 percent of Hai Lai Education Technology Limited for US$65.8 million. ChinaCast will pay 50 percent of the consideration within 10 days of signing in return for 20 percent of the remaining interest of the holding company of FTBC. The balance of 50 percent of the consideration will be paid by ChinaCast after the registration of the transfer of ownership with the authorities.
• China saw its online shopping market transaction volume hit 56.36 billion yuan (US$8.2 billion) in the second quarter of 2009, increasing 20.7 percent quarter on quarter and surging 91.9 percent year on year. The transaction volume growth was mainly driven by the purchasing peak season and a list of the vendors' promotion strategies. Online shopping has become the hottest industry in the nation's whole Internet market. China's largest online consumer-to-consumer (C2C) marketplace Taobao.com still led the platform-model online shopping market with an 82.7 percent marker share in the quarter, and BOE Technology Group Co., Ltd. took 28.8 percent of the B2C shopping market.
• Alibaba.com Ltd. booked 260.7 million yuan (US$38.2 million) in net profit attributable to equity holders in the second quarter of 2009, down 16.9 percent year-on-year, while revenues grew 23.6 percent year-on-year and 12.6 percent quarter-on-quarter to 908.3 million yuan (US$133 million). Registered users rose 31.5 percent year-on-year and 6.3 percent quarter-on-quarter to 42.78 million by the end of June, with 33.32 million users in the China marketplace. China storefronts grew by 46.1 percent year-on-year to 4.38 million by the end of the second quarter. Paying members were up 44.4 percent annually and 10.4 percent sequentially to 531,471 by the end of June. Subscribers consisted of 70,453 Gold Supplier users, 19,219 International TrustPass users and 441,799 China TrustPass users.

• The number of people accessing the internet through a mobile phone in China stood at 151.82 million at the end of the second quarter, up by 183.44 percent year-on-year and 9.39 percent from the first quarter. China Mobile (CHL) is the largest provider of mobile internet services with 67.5 percent of user volume, followed by China Unicom (CHU) with 26.7 percent and China Telecom (CHA) with 5.8 percent.
• KongZhong Corp.’s (KONG) net profit for the second quarter of this year increased 41 percent from a quarter earlier to US$355 million, with earnings per share hitting US$0.09. The company recorded US$32.3 million in total revenues in Q2 2009, representing a quarter-on-quarter growth of 9 percent and a year-on-year growth of 37 percent, higher than the firm's previous estimates of between US$30.5 million and US$31.5 million. Total gross margin during the period was 51 percent, compared with 49 percent recorded in the first quarter. KongZhong will conduct a long-term investment to Kong.net. The company aims to build it as a 3G mobile portal combined with social networking services. The firm predicted its total revenues would be between US$34 million and US$35 million in the third quarter of this year.

• Huawei Technologies and Ericsson (ERIC) beat out other telecom equipment manufacturers to win contracts in China Telecom's 50 million yuan (US$7.3 million) project to update the 10 Gbps DWDM backbone network connecting the Yangtze River Delta cities of Shanghai, Nanjing and Hangzhou. Huawei took about 80 percent of contracts. China Telecom plans to improve network speed from 10 Gbps to 40 Gbps. Product delivery is on the third quarter. Commercial operation of the updated network is slated for late 2009.

• The actual sales of China's self-developed online games had reached 11.01 billion yuan (US$1.6 billion), increasing 60.1 percent over the previous year, and the sales accounted for 59.9 percent of China's online game publication market. Though the administration encourages foreign companies to jointly develop online games with Chinese companies, it strongly prohibits these companies from online game operations with their own companies or joint ventures. Chinese online game companies gained rapid development in overseas markets.
• The World of Warcraft has resumed services with an open testing program which partly resolved the conflict triggered by the game's operating right transferring from The9 (NCTY) to Shanghai Netease (NTES). The General Office of the Chinese Ministry of Culture requires a reapplication of the approval number for a game when there is a change in ownership of operation rights. The WOW service stopped until July 30. But as the two operators continue to sell the game cards has led to a lot of dissatisfaction and anger among the WOW players in China. China's online game industry’s sales in 2009 are forecast to be 24 billion to 27 billion yuan (US$3.51-3.95 billion), which would bring about 67 billion yuan(US$9.5 billion) in incomes for telecommunications, IT and other related industries.
• NetEase booked net profit of 468.1 million yuan (US$68.5 million) for the second quarter of 2009, improving over 438.2 million yuan (US$64.2 million) in the year-ago period and 416.7 million yuan (US$61.0 million) in the first quarter of 2009. Total revenues grew on annual and quarterly bases to 872.1 million yuan (US$127.7 million) in the second quarter of 2008 and 781.7 million yuan (US$114.4 million) in the first quarter of 2009. Online game revenues were 781.5 million yuan (US$114.4 million), up annually and sequentially from 595.0 million yuan (US$87.1 million) and 724.0 million yuan (US$106.0 million), respectively. The company increased its technical and customer service staff by about 500 to support the Battle.net platform and World of Warcraft.
• Hurray! Holding Co., Ltd. (HRAY) reported the resignation of director Mr. Robert Mao from the Board, effective July 31, 2009. Mr. Niu is the publisher and creator of 'The Founder' magazine and a professional industry commentator.

• LDK Solar (LDK) booked a net loss of US$216.9 million, or US$2.03 per diluted ADS, for the second quarter of 2009 versus net loss of US$22.5 million, or US$0.21 per diluted ADS, for the first quarter of 2009. An inventory write-down, of about US$175.8 million, and a loss on firm purchase commitments of polysilicon materials, approximately US$16.7 million, negatively impacted gross margin and results from operations. Net sales for the second quarter fell to US$228.3 million from US$283.3 million in the previous quarter and US$441.7 million in the year-ago period. LDK shipped 231.7MW of wafers, up 20.9 percent year-on-year, during the three-month reporting period. For the third quarter, LDK is forecasting revenue of US$240 million to US$270 million with 260-300MW of wafer shipments and 10-20MW of module shipments. Demand for solar wafers is beginning to turn more positive.

Taiwan

• Chunghwa Telecom Co. (CHT) said three of its undersea cables across the Luzon Strait that provide international voice calls and Internet connectivity have been damaged by undersea landslides caused by Typhoon Morakot. The company has repaired one of the cables, but damage to two others has limited international voice calls between Taiwan and Singapore, the Philippines and Hong Kong. Chunghwa Telecom is discussing alternative connection routes with China Telecom Corp. and other foreign telecommunications companies. Companies whose voice connections have been affected by the cable damage will have 50 percent of their service restored, while those whose Internet connectivity has been affected will have 60 percent of the service restored.

• Compal Electronics Inc. shipped 3 million notebook PCs and scored combined revenue of NT$53.206 billion (US$1.61 billion) in July, with the latter hitting the highest this year and sharply growing 44 percent from last July. Netbook PC still accounted for over 800,000 units, indicating that launch of CULV platform-based laptops hasn’t eroded the segment for netbook PCs. The firm has scored aggregate notebook PC shipment of 17.3 million units very close to the corresponding figure of 17.8 million units posted by its major rival Quanta Computer Inc., the leading notebook PC supplier.

• MediaTek is expected to ship up to 100 million chipsets in the third quarter alone and achieve earnings per share of NT$32 (US$0.969) for entire the year. MediaTek ranked as the No. 2 IC chip designer in the world, only trailing Qualcomm (QCOM) of the U.S. The firm is very likely to see its single-month sales revenue break the NT$10 billion (US$303 million) mark in August. With handset IC chips contributing over 70 percent to its sales revenue. Strong market demand in emerging markets, like China, India and Brazil, will help to strongly boost its sales performance in the remaining months of the third quarter.
• Taiwan Semiconductor Manufacturing Co. (TSM) and United Microelectronics Corp. (UMC) have received more orders for ARM-based processor chips since late July. Qualcomm, Texas Instruments (TXN), Nvidia (NVDA), Freescale Semiconductor and a unit of Via Technologies all placed orders for the chips, which will be used in smartbooks. The increase in orders will raise the capacity utilization rates for TSMC's 65-nanometer and 55-nanometer technology to 100 percent by November, while UMC's rates will reach that level by the end of August.
• Inotera Memories raised NT$10.2 billion (US$310 million) without much difficulty by issuing global depository receipt (GDP). Inotera raised from the GDP issuance 10 percent more capital than expectations, with each share trading at NT$16.02 (US$.487). Inotera is the first Taiwanese DRAM chipmaker to smoothly raise capital from the international market during the economic downturn. Nanya Technology Corp., FPG’s other DRAM subsidiary, received NT$12.2 billion (US$369 million) from the group through a private-equity placement. Industry executives point out that new capital will help facilitate the two companies’ 50-nanometer process development.

• TOM Group has net profit of HK$11.67 million (US$1.5 million) with revenues of HK$1.19 billion (US$153 million). Profit increase 16 percent year-on-year on revenues with 4 percent year-on-year. The company's share of losses in e-commerce platform Eachnet, a joint venture with eBay, narrowed 44 percent. Average revenue per Eachnet buyer increased to 22 percent during the period. Eachnet opened a marketplace for imported Taiwan goods in June. Other revenue segments include publishing, which brought in HK$404.0 million (US$52.1 million) in first half revenue, outdoor media, and TV and entertainment.

Internet

With a failing PC business, Dell Inc. (DELL) now plans to enter the mobile phone market. Rumor has it that Dell will launch its first mobile phone -- in the Chinese market exclusively -- within the next two days.

Not much information is known about the phone, either on the hardware or the software front, but according to some sources, it will be like an iPhone with a large touch-screen and without a physical keyboard.

Hardware

• The world's No.1 plasma TV maker Panasonic Corp (PC) reported a net loss of 52.98 billion yen ($559 million) in April-June 2009, down from a 73 billion yen profit a year earlier. For the year to March, the company kept its net loss forecast of 195 billion yen (US$2.0 billion), half of last year's 379 billion yen loss (US$4 billion), but worse than analysts' estimate of a 185 billion yen loss (US$1.5 billion). Revenue for the April-June quarter fell 26% to 1.595 trillion yen (US$16.8 billion) from 2.152 trillion yen (US$16.7 billion) a year earlier, partly because of slow sales of digital cameras and flat-panel television sets. Panasonic is still targeting TV sales of 15.5 million units this fiscal year, up from 10.05 million last year, to lift its market share to 12%. As part of its TV, Panasonic will aggressively push plasma TV sets greater than 50-inches diagonal in the U.S., Europe and China given such screen sizes earn higher margins. It also will seek to cut production costs.
• Sony Corp. (SNE) will offer two new e-reader devices priced at US$199 and US$299. This will intensify competition in a burgeoning market dominated by rival Amazon.com (AMZN). Sony plans to cut prices on best-selling e-book titles in its online store to US$9.99 from US$11.99, matching the discount price offered by Amazon for users of its Kindle device and Barnes & Noble's (BKS) Fictionwise. Sony's new Readers, called the PRS-300 and PRS-600, are expected to go on sale later in August at such U.S. retailers as Best Buy Co. (BBY) and Wal-Mart Stores Inc (WMT). The smaller Sony device costs US$100 less than Amazon's least-expensive Kindle.

Telecommunications

• NTT Docomo (DCM) became the top net subscription gainer among Japan's mobile phone service providers in July for the first time in three years, wresting top spot from Softbank Mobile which had retained it for 26 months. NTT Docomo secured 143,600 contracts on a net basis. Softbank Mobile posted the second largest net subscription gain of 137,600 contracts thanks to brisk sales of Apple's iPhone 3GS handset launched by Softbank Mobile in late June.

Semiconductor

• Elpida Memory (ELPDF.PK) said that it plans to more than double its output of advanced DRAM chips for high-speed computers and servers next month. Elpida will boost output of its DDR3 chips to about 75,000 wafers per month starting in September, up from its current output of 20,000 to 30,000 wafers per month. As spot prices of DDR3 chips are at about US$2.10, up around 30 percent from May, Elpida and rivals Samsung Electronics and Hynix Semiconductor started to shift more weight to the new chips.
• Elpida Memory Inc. has signed a contract to receive around 30 billion yen (US$307 million) in investment from the state-backed Development Bank of Japan. The government picked Elpida as its first recipient for de facto public funds under its emergency financial aid program introduced amid the global economic downturn. Elpida will issue two types of preferred shares to the DPJ and the payments will be made by late August. If the investment fails, the government says it will cover 50 to 80 percent of the losses incurred by the DBJ with taxpayers' money.
• Japanese electronics manufacturers and chip makers are stepping up efforts to boost production of semiconductor chips and liquid crystal display panels to meet burgeoning demand partly due to the government's ''eco-point'' shopping incentive program. The consumer electronics appliance manufacturers include Sharp (SHCAY.PK), Toshiba, NEC Electronics (NELTY.PK), Renesas Technology and Fujitsu (FJTSY.PK). Semiconductor and LCD panel output has returned to levels before the global financial turbulence as progress has been made on inventory adjustments amid a pickup in demand. Eco-points are awarded for the purchase of highly energy-efficient products. The points can be exchanged for merchandise vouchers or electronic money cards with one point basically equivalent to 1 yen (US$0.10). Sharp boosted LCD panel production capacity at its No. 2 Kameyama factory in Mie Prefecture by 10 percent, starting in August, and that the workers there had given up their summer holidays. The panels are used in Sharp's Aquos televisions and supplied to other manufacturers.

Korea

Telecommunications

• KT Corp.’s (KTC) second-quarter net profit nearly tripled because of narrower foreign-exchange related losses and reduced marketing costs. KT posted a net profit of 456.1 billion won (US$372 million). KT Corp. absorbed its mobile unit in early June to become the country's dominant player in both the wireless and fixed-line markets. Sales increased 17.7 percent to 3.564 trillion won (US$2.9 billion). Operating profit dropped to 1.1 percent because of weaker revenue from fixed-line operations and broadband internet services. As sales were rising in July, the company will try to achieve sales and profitability growth in the second half.
• SK Telecom (SKM) is planning to sell its 15.3 percent stake in Virgin Mobile USA (VM), ending one phase of that firm's foray into the U.S. mobility market using the mobile virtual network operator model. SK Telecom also had been an investor in the failed Helio venture launched in conjunction with EarthLink.

Semiconductors

• Samsung Electronics and Hynix Semiconductors are raising chip prices to meet a rising demand for DRAMs. Samsung said that the company is planning to raise their products' prices by an additional 5 percent to 10 percent this month. The Korea Times has reported that there is an expected growth in the demand for PCs from the third quarter, which is a traditionally busy season for the electronics industry. Samsung's key clients are Dell (DELL), Hewlett-Packard (HPQ) and Apple (APPL) of the U.S. Chipmakers negotiate prices with their customers roughly twice a month. The NAND flash memory market has also begun to stabilize and officials expect it to move toward a supply-demand balance.
• Hynix Semiconductor announced the appointment of Ji Bum Kim as the new Chief Marketing Officer. J.B. Kim replaces Dae Su Kim, who has currently resigned. In his new position, J.B. Kim will be responsible for all Sales and Marketing functions at Hynix, covering DRAM, NAND Flash, and CMOS Image Sensors.

China

Internet

• Alibaba.com (ALBCF.PK) widens its loans with the signing of agreements with China Construction Bank (CCB) to expand its loan-assistance program to small companies in Hangzhou, Zhejiang province and Shanghai. CCB and the Shanghai, Zhejiang and Hangzhou governments will set up a reserve pool of 60 million yuan (US$8.8 million) in each region as a guarantee for the loans. Each loan under the Ali-loan program is at 2 million yuan (US$292, 706).
• Alibaba.com Ltd. is planning to establish a joint venture in India to provide business-to-business e-commerce services. The new Indian firm will be similar to the joint venture Alibaba.com set up with Japanese mobile telephone and Internet company Softbank (SFTBF.PK). The Japanese joint venture caters to local small and medium firms. An assistance program launched in 2007 by Alibaba.com's parent. Alibaba Group has helped around 1,400 small and medium-sized enterprises in China's Zhejiang province obtain loans in excess of 2.6 billion yuan (US$380.3 million) as of June 30. While the non-performing loan ratio among commercial banks in China was 1.77 percent as of June, the ratio on the so-called "Ali-loans" for the same period was 1.08 percent.
• Ctrip.com International (CTRP) recorded its second quarter profit of 159 million yuan (US$23 million), up 33 percent year-on-year and 31 percent sequentially. Total revenues were up 26 percent annually and 18 percent higher quarter-on-quarter to US$69.73 million, its highest net revenue record in recent years. Hotel reservation revenues contributed 227 million yuan (US$33 million), up 16 percent year-on-year and 21 percent quarter-on-quarter, while air-ticketing revenues grew 32 percent annually and 20 percent sequentially to 222 million yuan (US$33 million). The company attributed the growth to increasing reservation/sales volume, offset somewhat by decreasing commission rates. Packaged-tour revenues hit 36 million yuan (US$5 million), up 51 percent on an annual basis, but sliding 5 percent from the previous quarter. H1N1 flu had had an impact to the company, as well as seasonality factors.

US equity prices pulled back slightly again Thursday, but closed off their lows with another late-session buying spurt. Noteworthy was the fact that the S&P 500 hit a 2009 high of 1008.0 within a few minutes of the open and then sold off during the day due to consumer spending concerns and a focus on Friday’s national employment report.

At the closing bell, the S&P 500 (997.08 -5.64 -0.56%), the DJIA (9,256.26 -24.71 -0.27%) and the NASDAQ Composite (1,973.16 -19.89 -1.00%) all ended lower, but fractionally off 2009 highs.

Hardware

• Kyocera Mita Corp. (KYO) entered into a share purchase agreement with Chungho Comnet Co., Ltd. to acquire all outstanding shares of the two document equipment distribution subsidiaries of Chungho, Chungho OAsys Co., Ltd. and Chungho Document Solution Co., Ltd. By acquiring these two companies as its own sales subsidiaries, Kyocera will be able to drastically enhance its sales activities in Korea which Kyocera has placed as one of its strategic countries in Asia and also strengthen its sales capabilities in Asia together with the Chinese and Indian markets.
• Canon Inc. (CAJ) raised its group operating profit forecast by 10 billion yen (US$105.8 million). The upgrade is attributed in part to cost reductions, mainly in advertising and R&D, that are expected to result in 220 billion yen (US$2.3 billion) savings a year roughly 50 billion yen (US$528 million) more than its earlier target. With its office equipment business in the doldrums, however, overall sales are expected to drop 22 percent. The company plans to release next-generation copy machines in the second half of the year. But despite stepped-up marketing efforts in North America, a recovery in the copier business will take time as companies cut back on expenses, such as spending on color copies.
• Sony Corp. (SNE) posted a smaller-than-expected quarterly loss, helped by an improvement in its struggling flat TV business, and said it was aiming to beat its official forecast and at least break even for the full year. Sony has fallen behind Apple's iPod in portable music, Nintendo in videogames, and is struggling to compete with Samsung Electronics in LCD TVs. But the company, which competes with Panasonic for the position of the world's largest consumer electronics maker, said that losses on flat TVs had narrowed in the latest quarter, bringing the business close to the break even level. The maker of Bravia flat TVs and Vaio PCs kept its operating loss forecast of 110 billion yen (US$1.2 billion) for the year to March 31, 2010.
• Nintendo Co. (NTDOY.PK) and Sony Corp. are facing mounting pressure to cut prices after sales of the motion-sensing Wii fell for the first time and PlayStation 3 shipments tumbled to a two-year low. Nintendo shares fell the most in three months after the Kyoto-based company said Wii sales plunged 57 percent and profit dropped 61 percent. Sony reported a second straight loss after PlayStation 3 shipments fell 31 percent. Microsoft Corp. said last week it sold 1.2 million Xbox 360 consoles in its latest quarter, the lowest in two years. Sony Chief Executive Officer Howard Stringer and Nintendo President Satoru Iwata have spurned calls by game publishers and retailers to cut prices as the global recession drives down consumer spending. The stronger yen is also eroding earnings at Japanese electronics makers, making them less competitive relative to overseas rivals such as Samsung Electronics Co.
• Hitachi (HIT) plans to absorb five listed units, as the loss-making conglomerate tries to pool its sprawling resources to turn a profit. The news and hope that this would prelude further consolidation lifted shares of the Japanese maker of industrial electronics along with its subsidiaries. Hitachi will launch tender offers as early as next month to buy the shares it doesn't already own in Hitachi Maxell, Hitachi Plant Technologies Ltd., Hitachi Information Systems Ltd., Hitachi Software Engineering Co. and Hitachi Systems & Services Ltd. The move could cost Hitachi up to 300 billion yen (US$3.2 billion), including a premium on the units' share price.
• Hitachi Ltd. has plans to merge a pair of system-related subsidiaries this October in a bid to strengthen its system development business. Hitachi Electronics Services Co. will absorb Hitachi HBM Co. on Oct. 1 and become the surviving entity. All of Hitachi HBM's employees are slated to transfer to the merged firm. Hitachi Electronics Services handles system maintenance for the Hitachi group and also supports the introduction of information technology equipment at small and midsize businesses. By merging it with Hitachi HBM, which has expertise in system building, the aim is to enhance customer convenience through one-stop service. Hitachi Electronics Services turned three of Hitachi's system development units into consolidated subsidiaries, further strengthening its ability to propose systems to small businesses. The merger is expected to result in such synergies as subcontracting system development work from maintenance customers. Hitachi HBM was spun off in 1984 in order to expand sales in the office computer sales division.
• Fujitsu Ltd. (FJTSY.PK) will aim to strongly boost its profits to record-highs in fiscal 2011 through March 2012 by expanding its overseas sales and restructuring its operations. The company said it is anticipating a record group operating profit of 250 billion yen (US$2.6 billion) on sales of 5 trillion yen (US$52.8 billion), unveiling an aggressive midterm target for the next three years. Its net profit is also expected to reach a record 130 billion yen (US$1.4 billion) in fiscal 2011 in what would be a dramatic turnaround from a group net loss of 112.4 billion yen (US$1.2 billion) logged during the business year that ended in March. Businesses are likely to hit bottom during the current business year, adding Fujitsu will aim to raise its operating profit to 200 billion yen (US$2.1 billion) by fiscal 2010 thanks partly to the sale of its hard disk drive businesses to Toshiba Corp. (TOSBF.PK) and Showa Denko K.

Mobile/ Wireless

• Dena plans to buy a majority stake in the operator of a Chinese mobile social networking site, the Nikkei reports. Dena plans to buy more than 50 percent in UK firm Waptx, which operates China's largest mobile social networking site with a local partner. Dena will buy 8.73 million shares in the company through a private placement. Dena plans to use the portal site's content and expertise to expand its own social networking business. Dena already operates a mobile social networking site in China, but has less than 1 million subscribers while the Waptx service has about 9 million users.

Telecommunications

• NTT DoCoMo Inc. (DCM) reported fiscal first quarter results with 15 percent decline in its net profit to 147.4 billion yen (US$1.55 billion) from 173.5 billion yen (US$1.66 billion) given increased competition led to lower income from voice charges. Revenue dropped 7.3 percent to 1.08 trillion yen (US$11.4 billion), from 1.17 trillion yen (US$11.2 billion). The company maintained its forecast for the current fiscal year through March 2010, with revenues of 4.38 trillion yen (US$41.1 billion) and an operating profit of 830 billion yen (US$8.7 billion).
• Softbank Corp. (SFBTF.PK) enjoyed gains on increased service fees and handset sales. The company said its net profit jumped 41 percent in the fiscal first quarter to 27.38 billion yen (US$287.9 million) from 19.37 billion yen (US$185.2 million) in the same period a year earlier as increased revenue from both usage fees and handset sales boosted its mobile phone operations. It was much better than a consensus projection for a 11.2 billion yen (US$117.8 million) profit compiled by data provider Thomson Reuters from a survey of 13 analysts. Operating profit climbed 27 percent to a record 108.3 billion yen (US$1.14 billion) from 85.09 billion yen (US$0.81 billion) a year earlier with profit from the company's core mobile communication operations rose 36 percent. Broadband and infrastructure operations were also strong, with profit rising 33 percent. Revenue for the same quarter rose 2.9 percent to 666.33 billion yen (US$7.0 billion) from 647.26 billion yen (US$6.2 billion). Softbank's net profit for the April-June quarter jumped 41%

Semiconductors

• Tokyo Electron reported a smaller-than-expected quarterly loss and raised its annual outlook as orders start to rise in the latest sign of a spreading recovery in the chip sector. Chip giants Intel Corp (INTC) and Samsung Electronics Co, which recently booked better-than-expected quarterly results, are looking to invest more in new generations of chips to cut costs and cement their lead in the industry. Although still weak, orders for machines to make faster semiconductors more than doubled from the previous quarter, prompting Tokyo Electron to narrow its operating loss forecast by 9.5 percent to 57 billion yen (US$598 million).
• Renesas Technology Corp. and NEC Electronics Corp. will delay their plan to reach a merger agreement for a month until the end of August. The accord will be postponed because due diligence over their global production and sales bases spanning across Asia, Europe and the U.S. is taking longer than initially anticipated. Although discussions are ongoing on the investment ratio of the three major shareholders, Renesas, owned 55 percent by Hitachi Ltd. and 45 percent by Mitsubishi Electric Corp., and NEC Electronics, a chip unit of NEC Corp., will still aim to integrate their operations by next April.

Internet

• Yahoo Japan Corp. (YHOO) said net profit grew 0.4 percent from a year earlier in the fiscal first quarter, buoyed by the increased use of online advertisements to target female consumers. The company’s net profit for the April-June period rose to 19.24 billion yen (US$203.2 million), and is in line with its forecast of between 19 billion yen (US$200.7 million) and 20.1 billion yen (US$212.4 million) in net profit for the period. Operating profit for the period rose to 34.26 billion yen (US$361.9 million). Group revenue rose 3.17 percent to 67.64 billion yen (US$0.71 billion) from 65.56 billion yen (US$0.69 billion).
• eAccess Ltd. (ECLTF.PK) likely made a group pretax profit of around 1.8 billion yen (US$18.9 million) in the April-June period thanks to the acquisition of ADSL service provider Acca Networks Co. and smaller losses in its cellular phone business. The results would mark the telecommunications service provider's first pretax profit for the April-June quarter in three years. Sales appear to have declined 11 percent about 21.5 billion yen (US$0.23 billion) as low-priced data cards accounted for a higher proportion of the company's overall cellular phone hardware sales. The sales figures are in line with eAccess' initial projections. Operating profit is believed to have soared 43 per cent to roughly 5 billion yen (US$52.8 million). The absorption of Acca Networks helped eAccess reduce sales and administrative costs by consolidating its ADSL operations. In addition, losses at cellular phone unit Emobile Ltd. likely shrank by some 2 billion yen, with a net subscriber increase of nearly 40 per cent, or 262,000, sharply pushing up revenue. Net profit probably came to around 300 million yen (US$3.2 million), compared with a 2.8 billion yen (US$26.6 million) net loss a year earlier.

Media, Gaming and Entertainment

• Tokyo Broadcasting System Holdings Inc. will make an initial payment of 40 billion yen (US$420.1 million) to Rakuten Inc. in response to the virtual mall operator's request for a buyback of its TBS shares. After the breakdown of initial talks, the two sides sought court mediation to determine a buyback price. If the negotiations drag on for years, then TBS which is required by law to pay the interest it will owe Rakuten on the shares could end up incurring a huge interest burden. By making the temporary payment, TBS aims to hold down interest expenses. The broadcaster will tap bank loans for the funds to be paid to Rakuten.

Korea

Telecommunications

• SK Telecom Co. (SKM) said its second-quarter net profit rose 4.6 percent to 311.6 billion won (US$250.7 million) in the three months ended June 30 from 298 billion won from a year earlier despite higher marketing costs, mainly due to a rise in subscribers. Sales rose 4.7% to 3.068 trillion won (US$2.47 billion) from 2.93 trillion won (US$2.36 billion) because of an increase in the number of subscribers, largely from its wireless Internet data service. The company also said its capital expenditure amounted to 667.4 billion won for the first half of this year, including 319 billion won (US$256.6 million) spent in the second quarter to secure more profitable third-generation mobile services and improve call quality.
• LG Telecom Ltd. reported its biggest profit decline in six quarters after the company boosted marketing spending to win customers from SK Telecom Co. and KT Corp. Second-quarter net income fell 43 percent to 38.3 billion won (US$30.8 million) from 67.6 billion won (US$54.4 million) a year earlier. Sales rose 5.7 percent to 1.33 trillion won (US$1.07 billion). LG Telecom and SK Telecom increased incentives to lure users before KT absorbed its wireless unit, KT Freetel Co., in June in a market where more than nine out of 10 people already own a mobile phone. South Korea’s communications regulator has said competition may ease in the second half after the three operators pledged this month to rein in marketing costs such as handset subsidies. LG Telecom accounted for 18 percent of the Korean mobile- phone market at the end of June, compared with SK Telecom’s 51 percent and KT’s 31 percent, according to government data.
• SK Telecom Co. will sell its entire 15.3 percent stake in Virgin Mobile USA Inc. to Sprint Nextel Corp. Sprint Nextel said it would acquire Virgin Mobile in a US$483 million stock-swap deal. Sprint already owns 13 percent of the U.S.-based wireless services operator, and will buy out major shareholders Virgin Group and SK Telecom. Lauren Kim, a spokeswoman at SK Telecom, said that the company's stake in Virgin Mobile would be diluted to below 1 percent from 15.3 percent following Sprint's acquisition of the mobile operator.

Semiconductors

• Samsung Electronics Co. said it plans to begin mass production of its latest and fastest chip model later this month. The company will begin production of its 2-gigabit DDR3 DRAM chip, based on its 40-nanometer technology, six months after it developed the world's first 40-nanometer chip. The company expects the new product will lower power consumption to 70 percent of that for 50-nanometer DRAM chips. A nanometer is one-billionth of a meter. The technology will also improve productivity by as much as 60 percent, as each DRAM chip will take up a smaller space on the production line. DRAM is a type of memory that stores each bit of data in a separate electronic component within a circuit. It is used in personal computers and other electronic devices such as mobile phones.
• South Korea's antitrust watchdog fined Qualcomm Inc. (QCOM) 260 billion won (US$208 million) for abusing its dominance in the local chipset market and ordered the global mobile chipmaker to end its "unfair" business practices. Qualcomm disagrees with the ruling and will appeal in a South Korean court against it. The fine imposed on the U.S.-based company was the largest ever levied against a single business by the Fair Trade Commission since it imposed a 113 billion won (US$90.6 million) fine on KT Corp. in 2005. The commission also ordered the U.S. chip maker to stop paying rebates to its customers and imposing higher royalties for those using chips supplied by its rivals. The company has offered discounts and incentives to customers for using its chips, which has contributed to the competitiveness of Korean handset makers.

Hardware

• LG Electronics Co. is posting some of its strongest growth ever and taking market share from cellphone rivals. LG last year passed Motorola (MOT) Inc. and Sony Ericsson to become the world's third-largest seller of cellphones, shipping just over 100 million units, or about 8.6 percent of the global 1.17 billion. This year, with the overall cellphone market expected to fall more than 10 percent, some analysts predict LG's cellphone shipments will rise between 10 percent to 20 percent. The division's growth is expected to help LG post a profit when it reports quarterly results at a time that many consumer-electronics companies are struggling with deep losses.
• Samsung Electro-Mechanics Co. said its second-quarter earnings rose nearly nine-fold from a year earlier on high demand for mobile handset and TV components. Samsung Electro-Mechanics earned 76.6 billion won (US$61.2 million) in the three months ended June 30, up 791 percent. Sales rose 27 percent on-year in the April-June period to 1.316 trillion won (US$1.06 billion) with operating profit rising more than five times to 128.9 billion won (US$103.7 million).

China

Internet

• Baidu (BIDU) expects its new online market platform to help boost revenue this quarter as more advertisers migrate to the new system. Net profit for the three months to June rose a better than expected 44.6 percent to US$56.1 million, with revenue up 36.7 percent to US$160.7 million. Baidu forecast revenue for third quarter would grow 15 to 18 percent to of US$184 million to US$189 million, topping the US$182 million expected by Wall Street, according to Thomson Reuters.. The company would increase staff this quarter to boost the sales team for Phoenix Nest as well as its research and development team. Phoenix Nest, similar to Google's Adwords service, will gradually replace Baidu Bidding Rank and help rebuild the company's reputation after the Bidding Rank platform was accused of promoting fake medicine products. The firm served 203,000 active customers in the second quarter, and revenue per online marketing customer was 5,400 yuan (US$790.1), up 22.7 percent from last year.
• Alibaba Group has forged a strategic long-term alliance with state-owned Bank of China Holdings to jointly pursue a range of e-commerce initiatives, including an online payment card, trust rating system and small-business financing. Jack Ma Yun, the chairman and chief executive of Alibaba, expected the partnership to directly benefit the small-business customers of the bank and the group's subsidiaries. These include online payments service Alipay.com, business-to-business e-commerce provider Alibaba.com, internet-based business-management software supplier Alisoft.com and Taobao.com, the country's largest consumer e-commerce provider.
• Alibaba.com Ltd. is embarking on a reorganization that will separate the management of its domestic and international marketplaces, and step up cooperation between sister company Taobao.com and its domestic marketplace operations. The separation of management will allow the domestic and international platforms to further differentiate their strategies and user interfaces, among other things. Alibaba.com will also establish two new divisions aimed at helping its small-to-medium enterprise customer base gain access to information technology and employees trained to handle e-commerce.
• Changyou.com Ltd. (CYOU) posted total revenues of US$66.6 million for the second quarter of 2009, 39 percent increase year on year and 8 percent increase quarter on quarter. Operating profit was US$39.5 million, up 42 percent from the period last year and 4 percent from the previous quarter. Operating margin was 59 percent, higher than 58 percent in Q2 2008 but lower than 61 percent in Q1 2009. Net income reached US$34.5 million, growing 9 percent year on year and 3 percent quarter on quarter.
• Sohu.com Inc. (SOHU) reported second-quarter profit that beat analysts’ estimates on higher revenue from Web advertising and online games. Second-quarter net income was US$30.9 million compared with US$40.2 million a year earlier and beat the median US$27.8 million of nine analyst estimates compiled by Bloomberg. The company’s sales increased 25 percent to US$127.1 million, exceeding its guidance. Sohu, which in April spun off unit Changyou.com Ltd. in a US$138 million share sale, is speeding up development of its Internet search engine and adding videos and blog sites to lure users as competition rises from companies including Sina, Baidu said revenue will rise to a record this quarter as the nation’s economic growth helps boost advertising sales.
• The number of internet users in China grew by 40 million in the first six months of the year to reach 338 million at the end of June, a figure higher than the entire population of the U.S.. The number of broadband connections rose by 10 million to 93.5 million in the first half. About 95 percent of townships were connected to the internet via broadband as of early June and 92.5 percent of all villages were equipped with telephone lines that connect to the internet. Third generation mobile phone technology is also expected to boost rural coverage.

Telecommunications

• The telecom industry's average price levels in China had declined 8.5 percent year on year in the first half of this year. The industry's growth begun accelerating, even though it's still at a low level, dampened by the financial crisis. In the first half, the industry's business volume totaled 1,224 billion yuan (US$179.1 billion), up 11.8 percent year on year. It also registered 417.1 billion yuan in business revenue, edging up 2.3 percent. In regional terms, the industry's development in western region was more pronounced than in central and eastern China. The industry's revenues decreased 0.3 percent in eastern China year on year, but rose 2.6 percent and nine percent, respectively, in the central and western regions.
• The number of newly-added phone users in China was 43.5 million in the first six months of this year. China had more than 1 billion telephone users by the end of June, boosted by the launch of the 3G network. In January, the country issued 3G licenses to the top three telecom operators, China Mobile Ltd (CHL) China Unicom (Hong Kong) Ltd (CHU) and China Telecom Corp Ltd (CHA). The top three telecom operators have invested 80 billion yuan (US$11.7 billion) in China's 3G network so far this year. The ministry estimated that the top three operators would invest 170 billion yuan (US$24.9 billion) in 3G network construction this year.
• Huawei Technologies said 3G mobile network sales in the first half exceeded total shipments last year on strong demand from emerging markets such as China and India. The company, which has emerged as one of the top equipment vendors in the global telecommunications market, is expected to gain market share in Europe with its newly launched multimode network solution, Lu Xingang. UBS global telecommunications equipment analyst Gareth Jenkins estimates global telecommunications capital expenditure will weaken this year and next, with total spending declining 2.7 percent this year and 6.5 percent next year.
• ZTE Corporation (ZTCOF.PK) has signed a cooperative agreement with the Japanese mobile operator Willcom to provide ZTE's 3G data card product MF633 to users in Japan. As the fourth largest mobile operator in Japan, Willcom is also the largest personal handyphone system operator in the country with 4.6 million users and great influence in the Japanese market. At the beginning of 2009, the two parties signed a memorandum of cooperation for Time Division Duplex technologies, including XGP, to implement close cooperation to boost market share in this industry.

Media, Entertainment and Gaming

• China's mobile game market size hits 520 million yuan (US$76.1 million) in the second quarter of this year, up 32.37 percent quarter on quarter. Revenues from China Mobile's charges on information reached 230 million yuan (US$33.7 million), increasing 21.3 percent quarter on quarter. The company's quarterly growth rates of information fees in the first half of this year were over 20 percent, versus the -0.06 percent average quarterly growth in 2008.China Mobile's new game operating platform contributed most of the growth in its information fees, which topped 67.86 million yuan (US$9.9 million) in the second quarter, accounting for 30 percent of the total, while the growth of the old one slackened continuously.
• Giant Interactive announced it will acquire 51 percent equity in Hangzhou-based Xuelang Software. Based on the acquisition, the 2.5D-view game Xiantu Online developed by Xuelang Software will join Giant's venture platform "Winning in Giant," while Giant invests 40 million yuan to promote the game through primary marketing activities. This comes as the fifth project housed under the "Winning in Giant" platform, which aims to provide free capital, management and other supports to talented online game R&D groups to fuel their online game development.
• Giant Interactive plans to start alpha testing of its in-house developed 3D MMORPG Long Hun. More than 20,000 gamers activated testing accounts for Giant's in-house developed 3D fantasy MMORPG King of the Kings 3 on July 7, the first day of second-round testing, and the game hit 10,430 concurrent players on the same day. King of the Kings 3 entered first-round alpha testing on March 2008.
• Shanda Games Limited (SDG) (SNDA) will participate in the development of online game KOF World. SDG had reached an agreement with SNK Playmore, a Japanese game developer, on their cooperation. KOF World is the online version of The King Of Fighters, the heavyweight game software developed by Playmore. SDG is licensed to operate the online game in Mainland China and several other countries.
• Perfect World (PWRD) has not excluded the possibility of licensing foreign MMORPGs; before, the company had always focused on operating in-house developed games. Perfect World hopes to offer players other entertainment services besides online games. Perfect World took a step toward differentiating its business by establishing literature site zongheng.com last September, and investing in a webgame company and entering the film and video field this year. Perfect World had acquired a Chengdu-based webgame company and planned to release ten to twenty webgames in 2009.

Hardware

• Kaifa, a part of China Electronic Corp. (CEC), would invest 50 million euros (US$71 million) in Finnish firm Elcoteq. The announcement came as Elcoteq, a supplier to firms including Nokia, posted an operating loss of 11.5 million euros (US$16.4 million) in the second quarter and sales more than halved to 436 million euros (US$619.9 million). The deal would make the Chinese company its largest shareholder with a stake of at least 30 percent. CEC has been Elcoteq's joint-venture partner in China since 2002. Elcoteq said the total size of the investment was dependent on it successfully restructuring its debt, with a final agreement expected to be signed in the third quarter. It was not immediately clear what stakes main owners Antti Piippo, Jorma Vanhanen and Henry Sjoman would keep.

Alternative Energy

• China plans to subsidize demonstrative photovoltaic (PV) projects in the following two to three years through a program called Golden Sun. Each province is permitted demonstrative PV projects with a total capacity of 20MW. The government will subsidize 50 percent of total investment in PV power generation systems and power transmission facilities in on-grid projects, and 70 percent for independent projects.
• JA Solar Holdings Co Ltd (JASO) has received US$90.8 million under two three-year term loans from the Export-Import Bank of China. The loans carry interest rates below the benchmark rate set by China's central bank. The loans will strengthen its balance sheet and allow greater flexibility for financial and business planning. JA Solar's announcement comes as funding for solar power and green technology is beginning to recover from a dramatic fall-off earlier this year caused by the global credit crisis.
• Trina Solar Ltd. (TSL) raised its estimates for second quarter photovoltaic (PV) module shipments and gross margin, citing a rebound in the global solar market and supportive government regulations. Trina also forecast second quarter net revenues in the range of US$148 million to US$152 million, representing a 12 percent to 15.1 percent increase from the previous quarter and a 25.6 percent to 27.5 percent drop from the year-ago period. The company expects second quarter PV module shipments to total 63-65MW. Trina issued module shipment guidance of 90-110MW for the third quarter of 2009 and reiterated full year expectations of 350-400MW. Gross margin was forecast at 26-28 percent, up from previous guidance of 18-20 percent; operating margin is expected to be 11.5 percent to 13.5 percent.
• Yingli Group (YGE) broke ground on its 6 billion yuan (US$878.1 million) Yingli Industry Park in Baoding, Hebei province. The park will include a 800MW per annum crystalline silicon solar cell project, with a completion date set for December 2010. After the project comes on-stream, Yingli will have a total annual crystalline silicon solar cell production capacity of 1,400MW, and will generate sales revenues of as much as 15 billion yuan (US$2.2 billion) per year.
• LDK Solar (LDK) expects to report a net loss of US$180 million to US$200 million in the second quarter of this year, which it attributed to the sliding market prices of wafers. The company increased its guidance to revenues of between US$225 million and US$235 million and wafer shipments between 230-240MW but anticipates a write-down of US$150 million to US$160 million. LDK's fourth quarter financial results included a US$216.7 million inventory write-down. The company later updated its FY08 and Q408 results to include an additional write-down of US$87.5 million and a US$12.3 million provision for unrecovered supplier prepayments.
• Suntech Power Holdings (STP) has entered into a strategic agreement with China Energy Conservation Investment Corp. (CECIC) to develop solar projects, including large-scale on-grid, urban building-integrated, rural off-grid, and wind-solar hybrid projects, over the next five years. CECIC plans to take charge of project investment and development under the partnership, while Suntech will supply solar products, system design and technical support. Suntech's previously announced projects in Qinghai, Shaanxi, and Jiangsu provinces, as well as Shizuishan, Ningxia province and Panzhihua, Sichuan province, may be developed through the collaboration.

Semiconductor

• SMIC announced the successful commercial production of a 130nm family of DisplayLink USB graphics chips designed by DisplayLink and manufactured at SMIC. These new products make it possible to easily connect additional monitors, and provide a high level of integration for USB graphics devices, support higher HD display resolutions, and increase overall performance for smoother video playback.

Hardware

• Toshiba (TOSBF.PK) may finally be launching its own Blu-ray player. Toshiba, which lost the HD DVD vs. Blu-ray battle in early 2008, is reportedly readying a player that will read both Blu-ray discs and DVDs and will appear in stores by year's end. Toshiba had been thinking of developing yet another technology to combat Blu-ray but gave up because of the huge growing market for Blu-ray players and discs. The company will start with play-only models but may consider a recordable Blu-ray player if market demand calls for it, according to local newspaper. Toshiba's entry into the Blu-ray arena would mark the last holdout among all the major electronics manufacturers.
• Fujitsu Ltd. said it is targeting record profit in the 12 months ending March 31, 2012, as spending on software and information-technology infrastructure recovers. Net income will probably be 130 billion yen (US$1.38 billion) for the fiscal period while operating profit may reach a record 250 billion yen (US$2.6 billion) on sales projected at 5 trillion yen (US$52.7 billion). The company, which forecasts a return to profit this fiscal year, is selling its money-losing hard-disk-drive business to Toshiba to focus on semiconductor and software operations. Fujitsu also plans to outsource some chip production to Taiwan Semiconductor Manufacturing Co. (TSMC) to cut spending and help make the unit profitable next year.
• Consolidated sales for the April-June quarter by Japan's Disco Corp. dropped 48 percent on the year to 9.2 billion yen (US$98.3 million) but the figure represents a 42 percent increase from the January-March quarter. Sales of machinery for cutting and grinding semiconductor silicon wafers have been sluggish as customers hold back on capital investment. But sales of expendable supplies grew in line with higher operating rates at chip-making facilities around the world. The company also said that its parent-only sales for the quarter tumbled 52 percent on the year to 6.8 billion yen. It reported a net loss of 900 million yen.
• Sony Corp. (SNE) will break down its earnings results in new categories to reflect changes made in April to its organizational structure. Its electronics business was consolidated into the Consumer Products & Devices Group, which also consists of LCD televisions, digital cameras and semiconductors. Its game business is now part of the Network Products & Services Group, which also includes personal computers and portable music players. Music entertainment and business-to-business operations are now independent segments. The motion pictures and financial services segments will remain the same. The reorganized business segments will be reflected in the firm's April-June results. Dividing the earnings results into new categories may help investors better understand Sony's business, but it will make comparisons with past performances difficult.

Semiconductor

• Elpida Memory Inc. (ELPDF.PK) is reacting calmly to the Taiwanese government's announcement of a change in its DRAM rescue plan, as the company recently secured a total of 140 billion yen (US$1.5 billion) in financial assistance from the Development Bank of Japan and others. Receiving rescue funds from Taiwan was seen as crucial for Elpida's survival amid a severe slump in the DRAM market. The Taiwanese government's previous rescue plan centered around a tie-up between Elpida and TMC, a public-private DRAM joint venture to be established under the lead of the Taiwanese government. Under the old plan, Elpida was to provide cutting-edge DRAM technology for use by Taiwanese companies, and the Elpida-TMC alliance was to receive publicly funded financial assistance. But the government there now plans to provide funds to up to two recipients and accept applications from domestic DRAM makers. The Elpida-TMC alliance is still in the running for these funds, but will likely have to wait longer and may get less because of the additional recipient.

Telecommunications

• NTT DoCoMo Inc's (DCM) group operating profit likely fell 16 percent to about 250 billion yen (US$2.68 billion) in the April-June quarter as the year-earlier boost from reduced sales costs wore off. Quarterly sales likely dropped 2 percent to around 1.15 trillion yen (US$12.1 billion) and handset unit sales may have dropped adding that average revenue per user also appears to have fallen. However, DoCoMo added a net 112,400 contracts in June alone just 500 fewer than Softbank Corp. For the full year ending next March, DoCoMo is expected to maintain its forecast of a 1 percent drop in sales to 4.38 trillion yen (US$46.2 billion) and a nearly flat operating profit of 830 billion yen (US$4 billion).
• The Nikkei English News reported that NTT Data Corporation is planning to acquire BNI Systems Corp., the parent of Wuxi Huaxia Computer Technology Co., Ltd. NTT is a provider of system integration, networking system services, and related services, while Wuxi Huaxia is a China-based software development company. BNI had revenues of approximately 700 million yen (US$7.5 million) for the year ended July 2008.
• KDDI Corp. (KDDIF.PK) said its net profit for the first quarter ended June rose 19 percent from a year earlier, as cost-reduction efforts offset sluggish revenue. KDDI posted a net profit of 86.4 billion yen (US$912 million) in the three months ended June 30. Revenue fell 1.9 percent in the April-June quarter. Average monthly revenue per user fell to 5,600 yen (US$59.00) in the first quarter from 5,900 yen (US$62.24) a year earlier. The operator of “au” brand mobile phone services succeeded in reducing operating costs, partly by spending less on handset sales promotions.

Korea

Semiconductors

• Samsung SDI Co. said that its net profit rose 17 percent in the second quarter of this year from a year earlier mainly due to increased income from equity investment. Net income came to 58 billion won (US$46.4 million) in the April-June period, compared with 49.6 billion won (US$39.8 million) a year ago. Sales fell 6 percent on-year to 1.2 trillion won (US$955 million) during the same period on the back of a rise in overseas orders and operating profit increase 33 percent from a year ago. Samsung SDI attributed the rise to earnings from its stake in a joint venture with Samsung Electronics Co.
• Pixelplus Co., Ltd., (PXPL) announced unaudited financial results for the first quarter of fiscal 2009 ended on March 31, 2009 with revenue of 3.5 billion won (US$2.6 million), compared to 4.5 billion won (US$3.3 million) in the fourth quarter of fiscal 2008, and 3.4 billion won (US$2.5 million) in the first quarter of fiscal 2008. The Company's lower-than-expected revenue was primarily due to the seasonality of sluggish sales in Asia typically exhibited annually in the first quarter, and weaker-than-anticipated sales to Chinese distributors and module makers. Pixelplus is a fabless semiconductor company in Korea that designs, develops, and markets CMOS image sensors for various consumer electronics applications,

Hardware

• South Korean TV makers claimed the largest market share of the global TV market during the first three months this year, widening their lead over Japanese and Chinese competitors. South Korea's Samsung Electronics Co. (SSNLF.PK) and LG Electronics Co. (LGERF.PK) together gained a market share of 33.4 percent in the first quarter of 2009. They had a large margin over the 23.3 percent held by Japanese TV makers Sony Corp., Sharp Corp. (SHCAY.PK), Panasonic Corp (PC). During the same period last year, South Korean makers held a 29.0 percent market share, while Japanese counterparts followed with 20.3 percent. Samsung Electronics and LG Electronics also beat out Chinese TV makers TCL Corp., Skyworth Digital Holdings Co. and Hisense Electric Co. East Asia-based TV makers grabbed a 69.1 percent market share in total for the quarter. The Netherlands' Philips Electronics N.V., with 4.1 percent market share, was the only company not from East Asia to make it into the world's top 10 TV makers.
• LG Electronics Inc. reported record quarterly profit, fueled by demand for flat- panels TVs, and forecast higher sales in the current period. Second-quarter net income climbed 62 percent to 1.15 trillion won (US$917 million), from 706.9 billion won (US$567 million) a year earlier. Profit was almost 50 percent higher than the 770.7 billion won (US$618.5 million) median estimate in a Bloomberg survey of 17 analysts. LG Electronics plans to overtake Sony Corp. in terms of LCD TV shipments this year by offering wireless and energy-saving models. The uncertainty in the global economy will continue in the current period.
• Samsung Electronics would invest 5.4 trillion won (US$4.3 billion) in green research and development and facilities to make the company eco-friendly by 2013. Of the total, 3.1 trillion won (US$2 billion) will be spent to develop products which cause less damage to the environment, and the remainder on energy-saving technologies and the environmental improvement of manufacturing facilities. Samsung Electronics did not detail how it would finance the initiatives but had around 5.3 trillion won (US$4.2 billion) in cash and cash equivalent at end-March. Samsung's plan includes reducing greenhouse gas emissions from manufacturing facilities by 50 percent, cutting total indirect greenhouse gas emissions from all products by 84 million tons through 2013, and ensuring all of its products are more environmentally friendly by increasing energy efficiency through measures such as cutting standby power consumption.
• Samsung Electronics is expected to invest at least 1 trillion won (US$790 million) in a semiconductor production facility in the second half of 2009. Kwon Oh-hyun, president of Samsung's semiconductor division, said at an industry event that Samsung expected its investment in the second half to rise slightly from the first half. The company has repeatedly declined to disclose the size of capital investments planned for this year or already made so far. The chip division investment in the second half would focus on introducing more advanced production technology, such as 40-nanometre circuitry for DRAM chips and 30-nanometre for NAND flash memory.
• LG Chem Ltd. will spend 430 billion won (US$341 million) to boost output of glass sheets for liquid crystal display (LCD) panels. LG Chem announced the investment plan a day after it posted a 31.2 percent jump in second-quarter net profit. LG Chem, which supplies glass sheets to LCD makers, is benefiting from a shortage of the key parts as LCD makers such as Samsung Electronics and LG Display, are increasing prices of the flat panels on the back of strong demand for LCD televisions and computer screens in China.
• The Korean presidential office announced on July 12 that Swedish telecom equipment vendor Ericsson (ERIC) is expected to invest in a joint project to develop 4G LTE (Long Term Evolution) technology, Reuters reported. The Korean presidential office added that Ericsson's five-year investment project is estimated at a ballpark figure of US$1.5 billion and is projected to increase Ericsson's staff in Korea to approximately 1,000 from 80 at present. After the announcement, Ericsson made clarifications to the Korea Communications Commission that the amount of its investment is still not fixed and that details of its investment plan are still being fleshed out and no definite scheme has been reached yet.

China

Internet

• China's Internet users numbered 338 million at the end of June this year. This translates to 40 million new regular Internet users in China in the first six months of this year. And there is still room for growth, given that Internet penetration stood at 25.5 percent at the end of June, up from 22.6 percent at the end of 2008. Mobile networks and devices play an important role in providing access to the Internet. 155 million people in China access the Internet via mobile. Although the spread of 3G networks and devices in the course of 2009 has helped drive mobile Internet take up, consumer enthusiasm is currently limited. A total of 65 percent of Internet users do not intend to use the mobile phone to access the Internet.
• China small and medium businesses are expected to spend more on Internet access than on their websites and online advertising combined in 2009 including US$3.7 billion on Internet access, US$1.8 billion on online advertising, and US$1.5 billion on website hosting, development and maintenance in 2009. The reverse trend is observed in developed APAC countries like Australia, Japan, and Korea. Currently, there are approximately 3.2 million small and medium businesses in China. Of this, 1.3 million SMBs have at least one PC, and 93 percent are using broadband to access the Internet. This means more than 59% of China SMBs are without PC and Internet access. For China Internet access providers and PC vendors, this spells tremendous opportunities in terms of customer base and future growth.
• Baidu Inc.'s (BIDU) second-quarter earnings rose 45 percent as the Chinese Internet company continued to post strong revenue growth and add advertisers. The company also offered strong third-quarter revenue guidance of US$184 million to US$189 million, topping the US$182 million expected by Wall Street. Baidu, which holds a commanding share of the Internet search market in China, warned earlier this year that its online marketing customers might scale back advertisements amid a weakening economy, but it has since kept the problem in check as the Chinese economy has rebounded.

Mobile/Wireless

• China's sales of cell phones in the second quarter of this year topped 33.07 million units, down 7.2 percent quarter on quarter, but the proportion of 3G handsets was below one percent. As sales promotion during the traditional Chinese New Year period of 2009 had satisfied consumers' demand for mobile phones in advance, China's cell phone entered slack season in April, and sales in branded handset market dropped. Statistics show that the sales of GSM handset in China declined sharply in the second quarter from January-March to 30.33 million units, representing a decrease of 7.5 percent on quarter. As China Telecom (CHA) gradually cut the subsidy on 2G terminals, sales volume of CDMA cell phones, with the certification owned by the carrier alone, decreased again in April-June to 2.497 million units after two consecutive quarters' soar, dropping 12.7 percent from the previous quarter. Sales of 3G handsets topped 242,000 units in China during the second quarter of this year, including 131,000 units of CDMA EVDO standard and 64,000 units supporting TD-SCDMA standard. Telecom operators took actions to boost the 3G terminal industrial chain, and issued more reasonable pricing policies with higher subsidies.
• KongZhong Corp. (KONG) co-founder, president and chief technology officer (CTO) Nick Yang, has tendered his resignation effective July 31, 2008. KongZhong also announced its appointment of educational service provider ChinaEdu Corporation and IPTV broadband solutions provider UTStarcom founder Charles Xue to the board of directors. Xue will replace Xiaolong Li, who resigned July 20 for personal reasons.

Telecommunications

• China Unicom (CHU) gained 862,000 new GSM cellular service subscribers, for June 2009, summing the total number to 140.38 million. The company reported a decrease of 255,000 in local access subscribers, and was met by 980,000 new broadband subscribers. The total subscriber numbers in these two services amounted to 108.45 million and 34.91 million, respectively, by the end of June.
• It is expected that ZTE Corp. (ZTCOF.PK) and Huawei Technologies Co. Ltd. will spend at least 500 million yuan (US$73.18 million) replacing base stations provided by Datang Mobile Communications Equipment Co. Ltd. during China Mobile's (CHL) first phase of TD-SCDMA network construction. ZTE would replace 3,000 Datang Mobile-made TD-SCDMA base stations for China Mobile's Guangzhou subsidiary while Huawei would replace approximately 4,000 base stations originally deployed by Datang Mobile on behalf of Shanghai Mobile. Both privately-owned companies will undertake the task at no cost to China Mobile. Datang Mobile locked in 27.46 percent of the network equipment tender for first phase construction, while ZTE was the biggest winner, accounting for 45.54 percent of the total contract value. ZTE, Huawei and Datang Mobile also attained sizeable portions of China Mobile's second and third round network equipment tender.
• China Telecom ended June with 49.05 million broadband customers after adding 810,000 new subscribers during the month. In the year to date, China Telecom attracted 4.78 million new broadband customers. On the fixed voice market, the company shed 1.39 million customers to end the month with 199.36 million local access lines in service. China Telecom further added 2.37 million mobile customers to reach a total of 39.28 million. In the year to date, the company has gained 11.37 million mobile subscribers.
• China's three carriers, China Mobile, China Unicom and China Telecom, injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan (US$29 billion) in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.8 million yuan (US$11.5 million) on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. In June, their expenses on online advertising fell, but still stayed above 100 million yuan (US$14.6 million) to 115 million yuan (US$16.8 million).
• An industrial insider has revealed that China's leading telecom equipment manufacturer ZTE Corp. has taken the lead in China Mobile's third phase TD-SCDMA equipment purchasing bid and thereby acquired a 34 percent market share. Kang Zhiyi, an analyst with TX Investment Consulting, said the market had predicted that a 35 percent share would be won by ZTE, so the 34 percent share was in line with market expectation. Besides, the producer had respectively taken 46.78 percent and 28 percent shares in the bids during the first two rounds, and will now serve as China Mobile's largest TD equipment provider in terms of market share.
• Commonwealth Bank of Australia (CBA) has raised its stake in China Communications Services (CCS) to 11.02 percent from the previous 10.95 percent. Information from HKEx showed that CBA on July 13 bought around 1.52 million shares of CCS for HK$7.04 million (US$908 million) at an average share price of HK$4.62 (US$0.60) per share. Shares of China Communications Services, a subsidiary of China Telecom, edged up 0.64 percent.

Media, Entertainment and Gaming

• China's mobile game market size hits 520 million yuan (US$75.9 million) in the second quarter of this year, up 32.37 percent quarter on quarter. Revenues from China Mobile's charges on information reached 230 million yuan (US$33.6 million), increasing 21.3 percent quarter on quarter. China Mobile’s quarterly growth rates of information fees in the first half of this year were over 20 percent, vs. the –0.06 percent average quarterly growth in 2008. It's new game operating platform contributed most of the growth in its information fees, which topped 67.9 million yuan (US$9.9 million) in the second quarter, accounting for 30 percent of the total, while the growth of the old one slackened continuously. Information charges earned from the new game platform will keep on growing, with enrichment of mobile games on the platform as well as increase of payable games.
• The Chinese online gaming industry is expected to develop rapidly with sales income increasing 30-50 percent this year. The sales this year were forecast to be 24-27 billion yuan (US$3.51-3.95 billion), which would bring about 67 billion yuan (US$9.8 billion) in income for telecommunications, IT and other related industries. The official made the remarks at a forum during the seventh session of the China Digital Entertainment Expo and Conference (Chinajoy), the country's largest game convention. The online gaming industry showed great potential in independent research and development.
• Electronic Arts (ERTS) and NetDragon Websoft (NDWTF.PK) announced a licensing agreement for the development of a new MMORPG based on "Ultima Online" from Electronic Arts. As part of the agreement, NetDragon will develop the new Ultima Online(TM) in collaboration with EA's Mythic Entertainment, and have the exclusive operating license for China, Hong Kong, Macau and India.
• The9 Limited (NCTY) has entered into an agreement with USERJOY Technology Co., Ltd., an online game developer in Taiwan, for an exclusive license to operate Kingdom Heroes 2 Online, a 3D MMORPG, in mainland China. Kingdom Heroes 2 Online is a 3D Fantasy MMORPG which stresses on the core feature of Kingdom Wars that maintains a strong community in the game. Kingdom Wars allows hundreds of thousands gamers to fight in the same map. Gamers can bring soldiers and operate the huge siege engine such as catapult to conquer the city; even more, they can experience the exciting vessel battle on the sea. Kingdom Heroes 2 Online breaks through the original 2.5D side-scrolling restriction and evolves to the 3D characters and scenes. With seamless map, massive content upgrade and new battle mode, it is considered as a popular MMORPG product for our 2010 pipeline.
• CDC Corp. (CHINA) business unit CDC Games estimates that second quarter 2009 revenue will increase by roughly 50 percent over the first quarter. CDC Games recorded US$6.3 million in revenue from continuing operations in the first quarter, down 27 percent year-on-year. The company attributed the increase to a rebound in metrics for licensed MMORPG Yulgang after it launched version "Nan Lin Feng Yun" in late March 2009.

Hardware

• Hewlett-Packard Co. (HPQ) inked a memorandum of understanding with the municipal government of Suzhou, a major city in Jiangsu Province, to build a software outsourcing service center in the city. The outsourcing service center will provide HP's foreign and domestic clients in Suzhou with services such as consulting, design, development, testing, implementation and management. The two sides will first cooperate to build a data center and information management and service platform in the International Technology Park in Suzhou Industrial Park. They also plan to build a public logistics platform and a public information technology service platform for small and medium-sized enterprises in Suzhou.

Semiconductor

• Industry insiders estimate MediaTek Inc. (IMKI.OB) to deliver a record 100 million sets of chips for mobile phones throughout the third quarter due to the revitalizing demands for counterfeit mobile phones and exports of the phones in mainland China. They previously expected the No.1 supplier of mobile phone chipsets in the mainland to see shipments lose steam in light of slipping demands and exports of the phones in the Chinese mainland toward the end of the second quarter. Throughout last quarter it delivered a record 80 million sets. Beginning early this month, the mainland’s demands and exports of the phones have instead picked up, clearing a huge number of the inventory backlogs of MediaTek MT6225 chips at phone makers. With the traditional September peak season for mobile phone sales in the mainland approaching, the mainland’s handset makers are stepping up replenishments of inventories of MediaTek chipsets.

China, the largest telecom market in the world by subscriber count, is likely to witness broadband boom. Government clearance for nationwide implementation of home-grown 3G (TDS-CDMA) networks has prompted the three main Chinese carriers, viz, China Mobile (CHL) (Analyst Report), China Unicom (CHU) ( Analyst Report) and China Telecom (CHA) (Analyst Report) to aggressively roll-out xDSL and FTTx services.

Various industry sources predicts that DSL connections may reach up to 126 million and that of FTTx connections may reach up to 50 million in China by 2014. At the end of April 2009, China had 671 million wireless subscribers, and penetration was approximately 45% in the country. It is estimated that the number of mobile users in this region may surpass 750 million by 2010.

Hardware

• Konica Minolta Holdings Inc. would start output at its new factory in Japan that makes high-tech film used in LCD panels by autumn 2010 due to a strong recovery in panel and TV demand. Konica Minolta had planned to begin production at the new plant in autumn 2009, but the company late last year decided to delay the start-up as the global downturn forced panel makers to cut output. Konica Minolta dominates the global market for triacetyl cellulose (TAC) film, which protects the polarisation plates used in LCD panels, with bigger rival Fujifilm Holdings Corp. Konica Minolta, which also competes with Canon and Ricoh in producing copiers and printers, plans to spend 18 billion yen (US$194 million) to build the new factory, which will be capable of making 50 million square metres of TAC film a year.

Telecommunications

• NTT DoCoMo (DCM) president Ryuji Yamada said the Japanese operator is on track for launching its new Long Term Evolution (LTE) mobile network in 2010, reports the Financial Times. The adoption of LTE will see DoCoMo's handsets become compatible with other operators' 3G networks for the first time since the 2001 launch of its FOMA service, which used a WCDMA standard that was slightly different to the one rolled out by the majority of the rest of the world. DoCoMo has learned a hard lesson from being the first operator in the world to launch 3G services. DoCoMo plans to launch LTE handsets in 2011 that are also compatible with its current 3G network, so customers can still access services if they're outside an LTE coverage area. DoCoMo will use its high-speed LTE network to offer mobile content services in a bid to drive new revenue in the saturated Japanese market.
• Softbank Corp. (SFTBF.PK), Japan’s third biggest mobile telecommunications provider, raised 30 billion yen (US$320 million) from the first BBB rated bonds sold to institutions in Japan by a non-utility borrower since Lehman Brothers Holdings Inc.’s collapse in September. The Tokyo-based company, priced three-year, 4.72 percent notes to yield 4 percentage points more than the yen swap rate, according to data compiled by Bloomberg. Softbank, rated the second-lowest investment grade of BBB by Japan Credit Rating Agency, becomes the first non-utility company with that rating to sell bonds to institutional investors in Japan for 10 months. Softbank will use money raised from the securities to repay debt, it said in a filing with Japan’s finance ministry today. The company sold 60 billion yen in 5.1 percent fixed-rate bonds to individual investors in May, Bloomberg data show.
• Softbank casts its eyes on the Greater China Region and inked a strategic cooperation agreement with Shanghai Media Group (SMG) on June 29, 2009. Softbank Founder Masayoshi Son and SMG President Li Ruigang signed on the agreement. The two parties will jointly to develop new media digital content business. Softbank is reported to cooperate with Far Eastone Telecommunications Co., Ltd. in August to launch mobile phone cartoon services. Far Eastone is in talks with Softbank subsidiaries in an attempt to introduce Japan's well-known cartoon works into Taiwan as soon as possible.

Semiconductor

• Japan's Ushio Inc. announced its subsidiary Ushio America Inc. has acquired a 49 percent stake in U.S. firm Necsel Intellectual Property Inc. Necsel has technology for low-cost mass production of visible-laser light sources, and Ushio plans to leverage this to boost its own competitiveness in the markets for light sources for data projectors and digital cinema display systems. Using the technology, Ushio will be able to broaden its lineup of light sources to include semiconductor lasers across the complete spectrum of visible wavelengths. The company plans to purchase the remaining 51 percent of Necsel over the next five years and turn the unit into a wholly owned subsidiary

Media, Entertainment and Gaming

• Square Enix Holdings Co. (SQNXF.PK) has shipped three million units of its "Dragon Quest IX" video game software in Japan since its release. In total, global shipments of the "Dragon Quest" series have surpassed 50 million units since the popular franchise debuted in 1986. Sales of the highly anticipated latest installment are going strong, too, with some 2.5 million units flying off the shelves in its first three days on the market -- beating the roughly 2.4 million of "Dragon Quest VIII," which was released in 2004. For the first time in the series, "Dragon Quest IX" runs on the Nintendo DS hand-held system. And through Wi-Fi wireless technology, up to four nearby gamers can play together.

Korea

Telecommunications

• SK Telecom Co. (SKM) is considering bidding for Kazakhstan's Mobile Telecom-Service, as part of its recent efforts to seek business opportunities overseas. Kazakhtelecom, Kazakhstan's incumbent telecommunications operator, said in late June that it plans to sell its 51 percent stake in Mobile Telecom-Service and that it would accept letters of intent from potential bidders by and final bids by Aug. 31. Mobile Telecom-Service, Kazakhstan's smallest GSM operator, was launched in 2007 and provides services under the brand Neo with 920,000 subscribers.

Mobile/Wireless

• Ericsson (ERIC) plans to invest US$1.5 billion in South Korea over the next five years. The company would set up a research centre in the Asian nation to develop environmentally friendly and fourth-generation wireless technologies. Ericsson also planned to increase the number of employees at its Korean unit to 1,000 from 80. The Korean government was determined to provide a level playing field for foreign businesses to compete with domestic rivals. The investment was expected to help boost Korea's competitiveness in the market for long-term evolution, or LTE, high-speed wireless technology, backed by Ericsson. AT&T and Verizon Communications are also choosing the standard. Verizon Wireless, the biggest U.S. mobile-telephone company, aims to begin offering a high-speed network in all U.S. regions by 2015 using LTE, which is scheduled to reach 30 markets by next year. LG Electronics, Asia's second-largest mobile-telephone maker, in December said it developed a faster wireless chip used in mobile telephones based on the technology.

Biotechnology

• Samsung Electronics plans to invest about 500 billion won (US$389 million) in the biotech medicine business. Korea’s economy minister Lee Youn-ho said that Samsung, the world's top maker of memory chips and flat-screen TVs, would spend the amount over the next five years on the biosimilar business. Biosimilars are versions of biopharmaceuticals whose patents have expired. Samsung declined to confirm the size of the investment but said biosimilars presented a new growth opportunity for the technology giant. Lee signed a letter of intent with several domestic firms, including Samsung Electronics and LG Life Science, on their investment in a government biosimilar industry development initiative, with Korea Development Bank and a state-led fund already committed to providing financial support.

China

Internet

• China's Ministry of Commerce (MOC) has not ruled against the proposed merger between Sina (SINA) and Focus Media (FMCN); documents for the merger have not yet been put on MOC records. Focus Media CEO Jason Jiang is "quite anxious" about the merger, and said recently that the MOC has continuously asked for more documentation. The companies first submitted an application for their merger in late December 2008.
• As of the end of 2008, China saw a netizen base of 298 million, and an Internet penetration rate of 22.6 percent, outracing the global average level of 21.9 percent.

Mobile/Wireless

• A total of 13.21 million mobile phones were sold in China in May 2009, up 9.6 percent from the previous month. The number of GSM mobile phones sold in May increased by 12.5 percent month-on-month to 11.06 million units, while only 2.15 million CDMA handsets, which included 39,800 3G CDMA 1xEVDO handsets, were sold in May, down 3.4 percent from April. The dip in CDMA mobile phone sales is the result of China Telecom's shift in focus from 2G to 3G. In addition, both China Mobile and China Unicom implemented subsidies within their 3G service plans in 2009 to attract more users. Five foreign brands, Nokia, Samsung, Motorola, Sony Ericsson and LG, accounted for a 65.6 percent share of China's mobile phone market in May. Nokia had the largest market share of 31.9 percent last month. Domestic mobile phone manufacturer ZTE was the sixth-largest brand in May with a 3.8 percent market share.
• Z-Obee Holdings, which provides design services for mobile-telephone manufacturers on the mainland, has launched its own handset brand to meet the country's growing demand for stylish wireless devices. The Singapore-listed company's new "Vim" brand for the mainland mobile-telephone market will cater to price-conscious consumers keen on using fashionable, easy-to-operate handsets. The firm's production road map includes launching a new model every 45 days, which would enable it to introduce at least eight models in Hong Kong and on the mainland each year. The initial batch of Vim handsets being introduced on the mainland includes a his and hers model designed for couples that has a text message authentication function. This allows text correspondence between the pair to be decoded with a specific password for privacy. Each Vim handset has a voice diary function, allowing users to record appointments on the phone and be automatically reminded by the device at the designated time.

Telecommunications

• China Mobile Ltd. (CHL) will invest 70 billion yuan (US$10.2 billion) in building and upgrading its telecommunications networks, and promoting the use of its 3G services in the country's vast rural areas over the next three years. The ministry will help it promote the adoption of 3G-enabled applications in rural areas.
• China's three telecoms carriers, China Mobile, China Unicom (CHU) and China Telecom (CHA), injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.79 million yuan on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. Their expenses on online advertising fell, but still stayed above 100 million yuan to 115 million.
• ZTE Corp. (ZTCOF.PK) has captured 34 percent of the latest 8.6 billion yuan (US$1.3 billion) 3G network expansion tender by China Mobile Communications Corp. Huawei Technologies won 22 percent while partner Nokia Siemens Networks claimed 7 percent. Datang Mobile Communications Equipment and domestic partner FibreHome Technologies ranked third with a 21 percent share. The rest went to China Putian, New Postcom and Ericsson, each winning five to six percent. ZTE and Huawei were helped by their offers of a free upgrade in China Mobile's existing TD-SCDMA equipment, which was installed in the previous two phases of network construction. Industry watchers said China Mobile's preference for supporting domestic vendors and homegrown technologies also enabled ZTE, Huawei and Datang to take a bigger share. As a result, foreign vendors' share was shrinking. The latest tender was the third by China Mobile for a network covering 200 cities or 70 percent of the areas on the mainland. The original contract size was about 8.6 billion yuan for the installation of 39,000 base stations.
• China Unicom aims to go up against market leader China Mobile for high-end users as early as October, thanks to its exclusive sales agreement for the popular Apple (AAPL) iPhone handset. Unicom and Apple are expected to announce a schedule for the iPhone's introduction soon. Meanwhile, industry sources have confirmed that Apple has already submitted the device to a Ministry of Industry and Information Technology laboratory for official approval. Unicom and Apple could not be reached for comment on the deal, but telecommunications sources said Unicom would launch the handset in the fourth quarter when its 3G mobile network will cover 284 cities across the country, up from 55 cities at the end of last month. The full commercial launch of its 3G network plus the exclusive deal with iPhone is expected to put pressure on China Mobile to defend its high-end users.

Hardware

• Greater China is expected to see an almost fourfold increase in demand this year for mini-notebooks, commonly known as netbooks, as computer makers aggressively market the low-cost devices amid the economic downturn. That growth spurt is likely to boost sales for the market's leading notebook personal computer suppliers - including mainland Lenovo Group (LNVGY.PK), Hewlett-Packard (HPQ), Dell (DELL), Toshiba (TOSBF.PK), Acer and AsusTek Computer (AKCPF.PK) and operators of high-speed 3G mobile networks. Netbook shipments on the mainland, Hong Kong and Taiwan are forecast to hit 3.9 million units, up nearly 260 percent from 1.1 million units last year. The market research firm said total industry shipments would reach nearly 33 million units, up from its earlier estimate of 27 million units. That would result in a global netbook penetration of about 20 percent and flat year-on-year demand for pricier, full-featured laptops. Many buyers were adjusting their discretionary spending and were buying netbooks as lower-priced alternatives to traditional laptops. Netbooks are smaller than typical laptops, carry few software applications and are mainly used for wireless internet access.
• Lenovo Group plans to expand its sales network coverage from more than 100 Indian cities to more than 300 within 2009. The company is currently restructuring to divide its global business into mature and emerging markets. Lenovo previously will open 30 retail locations in India to bring its store total to 150 and expand its service centers from 130 to 250.
• Shenzhen-based Coship Electronics Co., Ltd. has won an order worth US$21 million from EMB, an old customer in South America to supply digital TV set-top boxes. The order from EMB represents about 6.79 percent of Coship's total operating revenue in the entire 2008 and is the first overseas contract that Coship makes public this year. In November 2008, Coship got a set-top box order valued at US$12.21 million from the South American company. Coship had sold set-top boxes worth 120 million yuan (US$17.5 million) to EMB as of June 30, 2009, eight months after it secured the first order from the latter. The Shenzhen company, engaged in the production and sales of digital TV equipment and electronics, saw its digital TV set-top box software and hardware sales revenue account for 93.94 percent, 96.83 percent, and 95.94 percent of its revenue from major business in 2003, 2004, and 2005, respectively.
• TCL Corp. said that its net profit may plunge 80 percent from a year earlier to 85 million yuan (US$12.4 million) during the first half of this year. TCL Communication Technology Holdings Ltd, one of TCL's subsidiaries, saw sales of handsets and accessories slide 12.32 percent year on year to 1.02 million units last month, while its first-half sales declined 24.69 percent from a year earlier to 5.06 million units. TCL Multimedia Technology Holdings Ltd, another subsidiary of TCL Corp, sold 616,898 LCD TVs in June, up 60.3 percent from a year earlier, and 342,353 CRT TVs, down 56.1 percent year on year. TCL sold more than 2.31 million LCD TVs in the first five months of this year, representing a year-on-year increase of 103.7 percent. The sales volume of LCD TVs in the first five months accounts for nearly 60 percent of the company's sales in 2008.

Alternative Energy

• Suntech Power Holdings (STP) plans to invest 30 billion yuan (US$4.4 billion) in the four projects with a combined capacity of 1.8GW that it signed up to in recent weeks. The money represents just the initial investment. China's long term plan for the PV industry is 70 percent of projects will be on-grid and 25 percent building integrated PV.
• LDK Solar Co. (LDK) has purchased a 70 percent stake in Italian systems integrator Solar Green Technology for an undisclosed sum. The move is expected to enhance LDK Solar's presence in the Italian photovoltaic sector. In addition, the deal will help Solar Green Technology grow further through its partnership with LDK Solar for several projects in Italy and Europe.
• ReneSola Ltd. (SOL) has successfully commenced trial production on the first batch of polysilicon from Phase 1 of its two-phase, 3,000 metric ton annualized capacity polysilicon manufacturing facility located in China's Sichuan province. ReneSola's two-phase, 3,000 MT annualized capacity polysilicon manufacturing facility utilizes the Siemens process and a closed loop system to produce polysilicon. Phase 2 of the facility, representing approximately 1,500 MT annualized capacity, is scheduled to reach mechanical completion in September 2009.

An expansive stimulus package and an increase in lending have helped China’s economy, as well as the PowerShares Golden Dragon Halter USX China ETF Portfolio (PGJ), surge in recent months. PGJ has been solidly within the top 10 funds on the ETF International Momentum Table since mid-April, reflecting the rebound in China’s economy. Despite some long-term inflation fears, China’s economy could continue to grow quickly in the short term, and PGJ offers investors a balanced way to access this expanding market.

PGJ tracks the Halter USX China Index, which is composed of the U.S.-listed securities of companies that derive a majority of their revenue from the People’s Republic of China. Currently, 45.93% of the fund is giant cap, 32.65% is large cap, 4.19% is medium cap, 12.01% is small cap and 5.23% is micro cap. While PGJ’s assets are noticeably weighted toward the larger-cap stocks, access to the smaller-cap holdings helps investors keep a more balanced portfolio. The largest three economic sectors represented in the fund’s portfolio are information technology, energy and telecommunication services, with 22.28%, 18.88% and 13.86% allocations, respectively.

Telecommunications

• NTT DoCoMo Inc. (DCM) bought a 35 percent stake in NextWave Wireless Inc's software unit PacketVideo for US$45.5 million to strengthen its music and video services. DoCoMo is shoring up its contents services to fight subscription flight in a cut-throat and saturated market. DoCoMo aims to secure its partnership with PacketVideo, which already supplies the carrier with software to replay music and videos, ahead of the planned launch of its next-generation "Long Term Evolution" (LTE) services in December next year.
• NTT Communications Corporation (NTT Com), the wholly-owned subsidiary of Nippon Telegraph and Telephone Corp., and Integralis AG, an international provider of IT security services, announced the signing of a Business Combination Agreement and as part of this agreement, NTT Com agreed to launch a voluntary public takeover offer for all outstanding shares of Integralis. NTT Com offers 6.75 euro (US$9.4) in cash per share. The offer price represents a 70 percent premium over the three-month average closing share price on the Frankfurt Stock Exchange (Xetra) prior to the date of this announcement and a 35 percent premium over the closing price (Xetra) on 29 June 2009. Based on the number of Integralis shares outstanding, the offer would represent an equity value for Integralis of approximately 75 million euros (US$104.5 million). NTT Com has already secured irrevocable undertakings from key shareholders including all members of the management and supervisory board of Integralis, representing approximately 30 percent of the company’s voting rights.
• NTT DoCoMo Inc., Japan’s largest mobile-phone operator, aims to ship as many as 1 million smart phones in the country this year, helped by the release of a model running Google Inc.’s Android operating system. The company targets capturing half of the country’s market for smart phones, estimated to be between 1.5 million and 2 million units in the 12 months ending Dec. 31, President Ryuji Yamada, 59, said. Tokyo-based Kagawa estimates smart-phones will comprise less than 10 percent of total wireless-handset shipments in the country this year. DoCoMo will begin selling an Android handset made by Taiwan’s HTC Corp. on July 10 to compete with Apple Inc.’s iPhone offered by rival Softbank Corp
• Huawei Technologies has announced that the company has set up a long-term development lab in Tokyo, Japan. The lab will not only be used as a research and development center for LTE technologies, but also will provide testing and training facilities for the implementation and commercialization of the next-generation wireless technologies. In addition, Huawei's research team will be able to complete product tests with Japanese operators before delivery of new systems. Yan Lida, a representative from Huawei Japan, said that Huawei is glad to show its latest LTE testing technologies to clients in Japan. With the new lab Huawei and its partners can start to deploy the commercial use of the LTE network at any time. With the top innovative and training conditions provided by the lab, Huawei hopes to aid its Japanese clients in the research and development of LTE solutions.

Internet

• DeNA Co. will take a 50 percent-plus stake in British firm Waptx Ltd., turning the operator of a Chinese social networking site for cell phones into a subsidiary. DeNA will buy some 8.73 million shares in the British company this month via a private placement of shares. Through two fully owned units in Shanghai, Waptx has partnered with a local social networking service firm and together they run China's largest mobile social networking Web site, which boasts some 9 million users. DeNA intends to use its portal site content and expertise to expand its social networking business. Although DeNA currently provides mobile social networking services in China, it is struggling with just a few hundred thousand subscribers. In order to focus resources, DeNA could merge its own offering with Waptx's service.

Semiconductor

• Tokyo Electron is in no hurry to buy another semiconductor equipment maker as it seeks to develop new products and increase it market share. Tokyo Electron's clients, which include chipmakers Samsung Electronics and Toshiba and foundry TSMC, are just starting to invest in new equipment after a prolonged downturn. Takenaka, who in April inherited a company headed for a record operating loss this year, denied that the firm was looking immediately to expand its partnerships with equipment makers such as Novellus or ASM International. Tokyo Electron is focusing on raising its market share in areas where it has yet to secure top share, such as in etchers, where it competes with Lam Research Corp and Applied Materials.
• The CEO of Japan's Elpida Memory Inc. (ELPDF.PK) said that technology partner Taiwan Memory Co (TMC), which is backed by the Taiwan government, was seeking a stake of about 10 percent in Elpida. The government will invest some US$310 million in Elpida, part of US$1.7 billion in financial aid that includes loans from private banks to shore up the loss-making chip maker. On a separate matter, Elpida stated that despite withdrawing from Powerchip’s board of directors, the relationship between both companies remains strong and the working relationship has not changed.
• NEC Electronics's (NELTY.PK) semiconductor orders would increase several percent this quarter, helped by demand for chips used in cars and liquid-crystal displays. Orders in the quarter to probably jumped one and a half times from the previous three-month period, as manufacturers emerged from a period of excessive inventory cuts. He inherits a company facing its fifth consecutive year of losses as falling sales of chips used in mobile telephones, cars and flat-screen televisions outpace cost reductions. NEC Electronics in May said it planned to cut labor and research costs by 90 billion yen (US$972 million) this financial year to break even at operating level this fiscal year. The company was increasing production to meet a recovery in demand. The factory-utilization ratio, a measure of how close the plants are to operating at full capacity, would probably rise to 60 per cent this quarter, from about 50 per cent last quarter and 43 percent in the first quarter this year.

Alternative Energy

• China's Trina Solar (TSL) and Canada's Canadian Solar (CSIQ) are preparing to open liaison offices in Japan to launch their respective solar-cell modules on the market. The two companies are both integrated producers, manufacturing ingots, wafers, cells and modules. They supply a diversity of module types, including crystalline, polycrystalline and building-integrated photovoltaics. Having primarily developed their businesses in Europe, they now are targeting Japanese demand for further growth. Their liaison offices are to work out strategies to penetrate the Japanese market, where strong competitors are already building up their presences. Trina Solar posted sales of US$300 million in 2007, swelling the figure to US$800 million in 2008 by setting up offices in Barcelona in Spain, Munich in Germany, Seoul in South Korea, San Francisco in the U.S. and Shanghai in China. Its production center at Changzhou in China achieved an output capacity of 350 MW at the end of 2008 and is to be further expanded to about 550 MW by the end of this year.

Hardware

• Samsung Electronics Co. is entering Japan's market for digital signs. The company's local arm, Samsung Japan Corp., signed a sales agency contract with Nissho Electronics Corp. to market Samsung's digital signage products through the Nissho subsidiary NGC Corp. The first product will be the Samsung UD (Ultra High Definition Display), 46-inch LCDs that can be linked together to create huge screens. As many as 250 UD panels can be combined. Nine interconnected panels create a 138-inch display with 8 million pixels, or around quadruple the resolution of full high-definition. Samsung will also release high-intensity digital signs for outdoor applications. Japan's digital signage market is expanding, and Samsung has set a wide target that includes sales to airports and public facilities.
• Sony Corp. (SNE) Chief Executive Officer Howard Stringer spurned calls by Activision Blizzard Inc. (ATVI) to cut prices of the PlayStation 3 because the US$400 console is unprofitable. Activision CEO Bobby Kotick said last month the publisher of the “Guitar Hero” and “World of Warcraft” games may shift away from developing products for Sony’s PlayStation 3 toward cheaper machines by competitors of the company. The PS3 trails the Wii and the Xbox 360 in sales. The Wii sells for US$250 and the least expensive Xbox costs US$200. Sony cut the price for the PlayStation 3 in the U.S. in July 2007 and in Japan in October that year, when it introduced a new model. The game unit has been Sony’s biggest money-loser during the past three years, accumulating 415.3 billion yen (US$4.4 billion) of operating losses.
• Sony Corp. plans to launch a new Vaio laptop that will sell for around 60,000 yen (US$629) in Japan in August, making an entry into the fast-growing netbook market. Netbook PCs are smaller and cheaper than traditional notebook computers and optimised for simpler computing tasks such as Web browsing and email. Pioneered by Taiwan's Asustek in 2007, other global brands such as Acer Inc, Hewlett-Packard and Dell have pushed out their own lines since then. Sony, the last major PC maker to enter the netbook segment, hopes the new product's design and high-resolution display will help the consumer electronics giant establish a presence in the market. The new Sony machine, equipped with Microsoft Corp's Windows XP operating system and Intel Corp's Atom processor, will have an LCD display with a resolution of 1,366-by-768 pixels, compared with the 1,024-by-600-pixel displays that are widely used in other netbooks. Sony declined to unveil its sales target for the new netbook model, but the company aims to boost its overall Vaio PC sales to 6.2 million units in the year to March 2010 from 5.8 million units a year earlier.
• Sony CEO Howard Stringer said the company has no plans to buy out its partner Ericsson's (ERIC) stake in their handset joint venture (JV) Sony Ericsson. Howard Stringer told reporters that he wanted to make the partnership work, and had had no indication that Ericsson was planning on pulling out.
• Canon Inc. (CAJ) said it would cut about 700 jobs at its chip equipment operations, underscoring a bleak outlook for the sector as the global economic crisis hits demand and forces chip makers to curb capital spending. The company says most workers to be affected are in Japan and that the workers will be transferred to other sections within Canon. Steppers are multi-million dollar machines used to etch circuitry onto semiconductors and LCD panels. Canon spokesman Makoto Sugimoto declined to say how many staff it has in its chip stepper operations but the Nikkei business daily reported that the 700 jobs were roughly equivalent to 30 percent. Canon does not expect its optical products division, which offers microchip and LCD steppers, to turn profitable until 2012. The company expects the unit to post an operating loss of 27.4 billion yen (US$285 million) in 2009.

Korea

Information Technology

• South Korean exports of information technology (IT) products fell 11.6 per cent on-year in June as the global economic slump dampened overseas sales. Exports of semiconductors, mobile phones and other IT products reached US$10.17 billion last month, with imports dropping 17.1 per cent to US$5.35 billion for a surplus of US$4.82 billion. While June's outbound shipments fell off compared to the year before, total export volume has increased monthly over the past six months, indicating that the world economy may be making a gradual recovery. Exports in June surpassed the US$10 billion mark for the first time this year. The ministry, in charge of the country's industrial policies and trade promotion, added that while exports have contracted vis-a-vis 2008, negative growth has slowed in recent months. IT exports declined 39.2 per cent on-year in December but contracted 26.8 per cent in March and 17.1 per cent in May. Exports of mobile phones and semiconductors were down 7.4 per cent and 23.0 per cent respectively in June while overseas sales of liquid panel displays gained 4.0 per cent compared to the year before. China was the biggest importer of Korean-made IT products, buying US$4.14 billion worth, followed by the U.S. with US$1.40 billion and the EU with US$1.39 billion.

Hardware

• Cross LCD panel purchase between Samsung and LG, which has been long-held wish in display industry will eventually begin in September. For this, the Minister Lee, Yun-ho of the MKE and CEO of two companies will sign on MOU. Although the initial quantity isn't much, it holds special meaning in that the two firms will do cross purchase key products for the first time in the industry history after ups and downs. Recently relations between China and Taiwan have deepened, check against Korean display industry has also become stronger, so the cooperation will fresh stimulus in overall industry. Samsung Electronics (VD and LCD Division) and LGE and LGD will conduct cross purchase for panels for monitors from September. VD Division of Samsung Electronics agreed to get 17 inch wide LCD panel for monitors from LGD and DD Division of LGE will get 22 inch wide LCD panel for monitor from LCD Division of Samsung Electronics. Samsung and LG received prototype of LCD panel for monitor from each other and are doing final test. This is the first time for Samsung Electronics to apply IPS LCD panel of LGD to its monitors.
• Samsung Electronics is estimated to buy US$7.5 billion worth of components from Taiwan this year for its liquid-crystal display (LCD) TVs lighted up by light emitting diode (LED) backlights. Samsung has projected to ship two million units of the TVs by the end of this year, a volume estimated to command 10 percent of its total TV shipments throughout this year. The company has delivered 400,000 systems in three months following the new launch in April this year, snatching up 90 percent of the world market. Items on the company’s procurement list include LED chips, LED backlights, display panels, monitors and TVs. The estimated 2009 procurements represent a 7-10 percent increase in value from 2008. Although supplies of the display panels are reportedly running short, Samsung Taiwan’s executives stress LED backlight supplies are much tighter than LCD supplies since the uses of the backlights, which have been the light source in cell phones, in TVs have sharply increased. The Samsung officials noted that LED-type LCD TVs are noted for their slim design, energy conservation, and eco-friendliness. The company has introduced 2.99-centimeter-thick TVs.
• Samsung Electronics expected operating profit for 2Q to be 2.2-2.6 trillion won (US$1.7-2.0 billion), which will be the highest since 2Q of 2004 of 3.7 trillion won (US$2.9 billion). Market experts said this is the good sign getting out of recession and have issued positive outlook after 2Q. Samsung Electronics surprised market on that day. The estimates paled the major prospects by securities firms. If estimates become reality, the firm is going to turn around to go back before recession. The figure is conservatively 2.2 trillion won (US$1.7 billion). That is the highest since 2Q of 2004 and double average prospect by 26 securities firms of 962.8 billion won (US$747.6 million). The market attributed recovery of competition to good performance. In short, DS, slowed than cell phone and TV in 1Q, showed unexpectedly high performance. Semiconductor LCD sector that was deficit 980 billion in 1Q, turned around and TV and cell phone continued growth.

Media, Entertainment and Gaming

• The real-time IPTV service subscribers in Korea hit 468,773, a 10-time increase compared with the end of last December. Also, the total subscribers increased to 1,687,833 by 34,000 in just 6 months. That is bigger than the cancellation of the VoD IPTV subscription. On July 2, Korea's three IPTV operators said that KT's Qook TV has 724,564 subscribers while LG Dacom's My LGTV and SK Broadband's Broadband & TV have 188,289 and 774,980, respectively. Particularly, the number of subscribers to the real-time IPTV service has increased from 1,000 at the end of last year to 3.860 per day at the end of June, showing the strong development of the IPTV market within this year. Such a growth is likely to continue even in the second half. Noticeably, the statistics of June show that although subscribers of the VoD service have reduced dramatically, the overall IPTV subscription is growing thanks to the rapid growth of the real-time service subscribers.

Investments/ Ventures

• Japanese direct investment in South Korea surged 82.6 per cent in the first six months of the year to US$1.17 billion, or roughly 114 billion yen (US$1.2 billion), compared with the year-earlier period. Investment by manufacturers accounted for some 90 percent of this figure, mainly producers of parts and materials. AvanStrate Inc. is currently constructing a plant for glass substrates used in LCD televisions in the city of Pyeongtaek. Formerly known as NH Techno Glass Corp., the firm hopes to expand shipments to Samsung Electronics when the factory starts operations possibly by year-end. Although the firm has not disclosed the cost, it sought permission to invest 300 million dollars during the January-June period. Asahi Glass Co. also submitted an application to invest 35 million dollars to boost output of LCD glass substrates. Japanese investment in South Korea grew sharply since last October as the yen strengthened against the won. The U.S. and Europe cut investment because they were hit hard by the financial crisis. But Japanese materials producers saw opportunities to increase supplies to Samsung and other local companies that are competitive internationally. South Korea has been actively trying to attract the Japanese parts and materials sectors in order to shrink its trade deficit with Japan.
• The South Korean government plans to invest 155 billion won (US$122 million) into 26 commercial projects to boost up new growth industries by mid 2010. The government is designing the so-called short-term research and development funds to support companies in related areas. Under the recent plan, companies in eight main industrial areas, such as bio-pharmaceuticals, robotics, desalination plants, light emitting diodes, new semiconductors, displays, green cars and clean coal will be receiving the funds. The companies include large conglomerates such as Samsung Electronics Co., Hyundai Motor Co., SK Energy Co., LG Electronics and POSCO, as well as small-sized companies. Companies to get the funds are expected to invest 1.9 trillion won (US$1.5 billion), into facility investments by 2011.

Semiconductors

• Hynix Semiconductor Inc will reduce investment in a new production facility by 45 percent to 2.1 trillion won (US$1.64 billion) and extend the investment period by two years to 2011. The world's No.2 chipmaker said it would invest 24.6 percent of its capital between April 2007 and December 2011 to expand 12-inch wafer production capacity in Chungju, south of Seoul. Originally, it had planned to invest 3.8 trillion won or 44.5 percent of its capital between April 2007 and July 2009, in a board decision made in April 2007.

China

Internet

• Netease.com.Inc. (NTES) will pay an annual base payment of no more than US$60 million to Blizzard Entertainment, a leading computer games developer. The company would pay a minimum amount of fees regardless of the game's operations, as stated in the agreement signed by two sides. Aside from the share of revenue, Blizzard could also gain from providing technical support, though this amount would be out-scaled by the base payment.
• Shanda Literature, an online literature platform of Chinese online game operator Shanda Interactive Entertainment Ltd. (SNDA), is seeking new profit-making modes. The unit held a 3G mobile phone original novel exhibition in an attempt to collect excellent works. In future, it will launch mobile phone payment novel download services and share download charges and advertising revenues with authors. Shanda Literature will partner with China's top ten publishing houses. Mobile phone reading is likely to lead the reading market and draws attention of the investment industry. Shanda Literature started to optimize its wireless reading platform last year and reached strategic cooperation with China Mobile (CHL). Established in July 2008, Shanda Literature operates three online literary websites, including qidian.com, hongxiu.com, as well as jjwxc.net. By the first quarter of 2009, the daily peak visit volume of the three sites had reached nearly 400 million.

Software

• Kingsoft and Qihoo 360 have agreed to launch customized security services on each other's platforms. With the cooperation, Qihoo 360 will promote the Kingsoft Duba 360 customized edition to its 200 million users. Kingsoft Duba will then recommend the 360-Kingsoft customized security browser on its official website. The service fee of the customized Kingsoft Duba is 25 yuan (US$3.6) for six months and the two parties will share the income, but the profit-sharing ratio has not been released. The corporation between the two companies has gained wide attention from the Chinese online security industry because the competition in China's anti-virus software market is quite serious.

Mobile/Wireless

• China's mobile e-commerce revenues are expected to rise up to 130 percent from 2008. With the arrival of 3G era, China's three telecom operators, China Mobile, China Unicom (CHU) and China Telecom (CHA) and newcomers, such as Beijing UFIDA Mobile Business Technology Co., Ltd., have tasted the water in the field of mobile e-commerce one after another. However, since China's mobile e-commerce is still in the initial stage of development, credit lacking, incomplete payment system, unclear mode of business and other negative factors will somehow restrain the cultivation of the market.

Telecommunications

• China's telecom industry generated business volume of 214.12 billion yuan (US$31.3 billion) and operating revenues of 71.47 billion yuan (US$10.4 billion) in May. Statistics show that the industry's business volume in the first five months exceeded one trillion yuan (US$146.3 billion), up 11.3 percent on year and operating revenues climbed 2.1 percent on year. The nation's fixed-line business volume kept on dropping with the moderate growth in mobile communications business volume. Traffic volume of local fixed-lines in January-May decreased 11.8 percent from a year earlier to 232.59 billion times. The duration of traditional fixed long-distance calls and IP calls declined 4.6 percent and 16.8 percent, respectively, to 35.21 billion minutes and 50 billion minutes, and that of mobile phone calls rose 17.6 percent. The volume of text messages sent in the first five months hit 319.54 billion pieces, up 11.2 percent on year.
• China Mobile Ltd. reached a mobile Internet user base of 139 million in the first quarter of 2009, surging 38.12 percent quarter on quarter and 226.37 percent year on year. The company's mobile Internet active user base reached 94.59 million, making up 68.2 percent of the total in the Chinese market. China Unicom (Hong Kong) Ltd. had a GSM active user base of 36.64 million, accounting for 26.4 percent of the total; and China Telecom Corporation Ltd. hit a CDMA active user base of 7.56 million, taking 5.4 percent of the total. With the 3G network beginning commercialization in China, the nation's three biggest telecoms operators scramble for mobile Internet users, which will be the biggest beneficiary to enjoy low-price and increasingly various mobile Internet services.
• China now has a TD-SCDMA user base of more than 1.03 million, Su Jinsheng, director general of the Bureau of Telecommunication Administration under the Ministry of Industry and Information Technology of China said. China Mobile Ltd. is the only TD-SCDMA carrier in the nation's fledging 3G market. It is the biggest telecommunications carrier in both China and the world in terms of number of subscribers. Under the program made by the listed company's parent China Mobile Communications Corporation, the number of China Mobile's cell towers has been beyond 20,000; and it is scheduled to invest 58.8 billion yuan (US$8.6 billion) in its cell tower construction in 2009 and lets the number exceed 80,000, serving 238 cities across the country.
• China Unicom and the Shanghai Municipal Government signed a framework agreement on cooperation in the informatization field. The Unicom Group granted a three-year investment of 20 billion yuan and confirmed cooperation with local government in several areas. The telecom operator will increase the fixed-asset investment in Shanghai, enhance the city's informatized service ability, boost the economic growth, and turn the city into a key information and communication hub in the sia-Pacific region. The carrier earmarked 800 million yuan (US$117.1 million) for guaranteeing the communication during Shanghai World Expo in 2010, and would boost the employment in the municipality through promoting the development of each tache of the telecom industry chain, which may add about 10,000 jobs indirectly. Meanwhile, the Unicom Group would implement the broadband speed acceleration strategy in full swing, and boost the access network construction based on FTTB.
• China Mobile may buy a stake in Industrial and Commercial Bank of China, the world's largest bank by market value, as requested by China's state asset watchdog, the State-owned Asset Supervision and Administration Commission (SASAC). SASAC is encouraging state-owned enterprises to combine their industrial capital with financial capital. Its request is in line with its goal of propping up the shares of big state-owned banks, said the paper. However, talks are still in the preliminary stages, and the size of the stake SASAC is encouraging China Mobile to buy is not known. Officials from China Mobile said they were not aware of the request to buy into ICBC.
• China Telecom plans to purchase more than 3 million units of cellphones early July in cooperation with China's four agent dealer to launch a 3G handset procurement. Of the terminals the telecom operator plans to buy, the handsets at a price of over 1,000 yuan (US$146.3) per unit should support 3G, but there will be a small proportion of dual SIM card dual standby GSM mobile phones with prices above 2,000 yuan (US$292.6) per unit. For the CDMA handset market, market share of medium- and high-end cellphones with prices over 700 yuan per unit has showed an increasing trend to reach 22 percent in May with the sales volume amounting to 440,000 units.
• Datang Telecom Technology Co., Ltd. is in talks to sell a 20 percent stake, worth as much as 3 billion yuan (US$439 million), to China's national pension fund National Social Security Fund (NSSF). Datang Telecom, the major developer of China's TD-SCDMA standard for 3G telecoms services, and the fund have not yet finalized a price tag for the proposed private placement. The proceeds will be used to shore up Datang Telecom's production capacity and improve working capital. Last year, State Development and Investment Corp. (SDIC) bought a 35 percent stake in Datang Telecom Holdings for 5 billion yuan (US$731.7 million). The national pension fund and Datang have decided that the price range will be set between 2.5 billion yuan (US$365.8 million) and 3 billion yuan (US$439 million). The NSSF will take a 20 percent stake in Datang Telecom Holdings after buying new shares issued by the telecoms equipment firm.

Media, Entertainment and Gaming

• China's mobile game market size is expected to rise to 38.5 percent year on year. With the acceleration of China's 3G commercialized operation, mobile entertainment service will become a crucial driving force boosting the increase of mobile Internet businesses, and the mobile game, as one of the key parts of mobile entertainment services, is developing rapidly. Currently, improved environment of mobile Internet market and advanced handset terminal functions have placed a solid foundation for mobile game's development, and the service is expected to be a business aspect with high growth in the mobile Internet industry. China's mobile game market has entered into a growing period. 3G improves the operating environment of mobile game, the user base expands in great pace, and the number of newcomers soars. Industrial participators become increasingly conscious about the development trend of the mobile game market, and uncertain factors that may impact the industry chain lessen gradually. Contents of mobile game verify, game quality increases, and the mobile Internet game shows a booming trend.
• Noah Education Holdings Ltd. has acquired 100% of Little New Star Education Group for 113 million yuan (US$16.5 million) in cash and stock. Little New Star specializes in children's English language training and is expected to generate between 13 million yuan (US$1.9 million) and 15 million yuan (US$2.2 million) net profit in fiscal 2010. The parties already signed a definitive agreement for the acquisition.

Hardware

• Ericsson Telephone Co. has won deals totaling US$1.7 billion to deliver second- and third-generation mobile communication equipment to Chinese operators China Mobile Communications Corp. and China Unicom, indicating rapid growth on the country's telecom market. Mats Olsson, Ericsson's president for Greater China, said that the value of the deals is roughly equivalent to Ericsson's entire sales in the country during 2008. The framework contract with China Mobile, valued at US$1 billion, includes products and solutions to expand the company's networks in 18 Chinese provinces. Under the framework agreement with China Unicom, valued at US$700 million, Ericsson will upgrade the operator's GSM networks in 10 provinces and provide GSM/WCDMA networks and wireless access system in 15 provinces. Chinese operators were awarded 3G mobile phone business licenses from the authorities as recently as January. Western gear companies like Ericsson and Alctatel-Lucent have since then been fighting for market share in the country, aiming for a slice of its investment in improving the networks as growth on other markets slows.
• China's TV export value rose 32.8 percent and 6.9 percent month on month in March and April 2009, in spite of 17.1 percent and 22.6 percent year-on-year decreases. Chinese regulators lifted the tax rebate rate on CRT TV export to 17 percent, and the same drawback rate was imposed on TV transmission equipment export days ago. Partly thanks to these preferential polices, TCL Multimedia Technology Holdings Ltd. CEO Leong Yue Wing estimated TCL TV export value in 2009 to keep flat from last year. Tsinghua Tongfang Co., Ltd. is expected to sell 1.5 million TVs beyond China this year, rocketing 300 percent year on year. Xiamen Overseas Chinese Electronic Co., Ltd. saw export of 580,000 TVs, surging 65 percent from the comparable period of 2008. And the TV export of Skyworth Digital Holdings Ltd. hiked 69 percent year on year from April 2008 to February 2009.

Semiconductor

• MediaTek Inc. and Shenzhen Hesi Technology Co., Ltd. are expected to stir the Chinese Mainland's smartphone market with their new mobile phone chips. As a subsidiary of Huawei Technologies Co., Ltd., Hesi Tech lately launched its chips applicable to smartphones priced at 998 yuan (US$146) to 1,020 yuan (US$149.2). The prices of most smartphones in the mainland are higher than 10,000 yuan (US$1463), presently. In the fourth quarter of 2009, MediaTek Inc. will reportedly put up its first smartphone platform solution. And the move is expected to bring many knockoff manufacturers into the smartphone market, as 87 percent of the mainland's knockoff cellphones adopt MediaTek chips. Analysts estimated the world's smartphone semiconductor output value to jump 16 percent year on year in 2009, in spite of a deep decline in the whole semiconductor industry. As for the smartphone semiconductor output value in 2010, analysts predicted a 30 percent growth at least.

Alternative Energy

• Chinese government has set a new target of adding 20 GW of installed photovoltaics (PV) power generating capacity in the 10 years from 2010 to 2020, which means an increase of two GW for each year. China is likely to publish its new energy industry stimulus plan next month at the soonest. The plan raises the target for the installed capacity of the photovoltaics industry. China now has several solar PV enterprises listed in foreign stock markets. They include SunTech Power Holdings Co., Ltd. (STP), LDK Solar Co., Ltd. (LDK), Trina Solar Limited, Solarfun Power Holdings Co., Ltd. (SOLF) and China Technology Development Group Corporation, Yingli Green Energy (YGE), and JA Solar (JASO).
• Yingli Green Energy Holding has secured two credit facilities, the first worth US$100 million from Bank of Communications' Offshore Center, and the second worth 300 million yuan (US$43.9 million) from the Hebei Branch of Bank of Communications. The company also announced that its Baoding-based wholly owned subsidiary, Yingli Energy (China), made an early repayment of a US$50 million loan drawn in April this year from a fund managed by Asia Debt Management.
• Suntech Power Holdings said the company Chief Operating Officer Johnson Chiang has resigned from his post for personal reasons. Vice President of Manufacturing Technology and Quality Guangchun Zhang will oversee crystalline silicon PV manufacturing operations in China while Suntech searches for a replacement. Suntech Chairman and CEO Dr. Zhengrong Shi will take charge of the Shanghai thin film plant, KSL Kuttler and BIPV manufacturing operations at Suntech Japan. Guangchun Zhang joined Suntech as a VP in November 2005.