Technology, Media and Telecommunications: News from Asia

by: IRG Ltd
Softbank Corp. (OTCPK:SFTBF) is interested in buying stakes in Indian and Chinese companies. The company is eying companies engaged in mobile applications and technology. Softbank bought an additional stake in U.S. application provider RockYou Inc. for US$50 million. Softbank has a 33 percent stake in Alibaba Group, the parent of business-to-business online platform Ltd. (OTC:ALBCF). The Japanese company is also the single largest shareholder of Yahoo (YHOO) Japan, with a 44 percent stake.
Hitachi Ltd. (HIT) is raising up to US$4.6 billion to cut debt as it seeks to turn around its sprawling businesses and also invests in new growth drivers. The capital raising, the company's first in 27 years, follows similar moves by NEC (OTC:NELTY) Corp. and Toshiba Corp. (OTCPK:TOSBF), and sent Hitachi's shares down 8.5 percent in the biggest drop in six months even though markets expected the fund-raising. The company might be forced to tap markets again. Hitachi had sought to seek money before it could form a realistic plan for recovery. Hitachi is headed for its fourth straight annual loss. The group is seeing a recovery in its hard drives business and strong sales of its metals, cables and construction machinery but this has not been enough to counter the impact of losses in its flat TVs and semiconductors businesses.
NEC Corp. sold 117.6 billion yen (US$1.3 billion) in new shares to help fund businesses and pay off debt. The company, forecasting a return to profit this fiscal year, seeks funding to invest in the development of advanced telecommunications gear and services and to help shed its money-losing chip unit. NEC joins companies from Nomura Holdings Inc. (NYSE:NMR) to Malaysia’s Maxis Communications Bhd. in pursuing sales as equity markets rebound from the rout caused by Lehman Brothers Holdings Inc.’s bankruptcy last year. The company will sell as many as 537.5 million new shares to Japanese and overseas investors. The sale will increase NEC’s outstanding shares by 28 percent.
Elpida Memory, Inc. (OTC:ELPDF) said that Shuichi Otsuka became the new president of subsidiary Akita Elpida in place of the retiring Takayuki Watanabe. While serving as president of Akita Elpida, Mr. Otsuka will also continue as Chief Operating Officer for the parent Elpida and serve on Elpida’s board of directors. With his retirement from Akita Elpida, Mr. Watanabe now moves to Elpida to take charge of improving TSV packaging development.
Media, Entertainment and Gaming
Jupiter Telecommunications (OTC:JUPIF) ended October with 3.26 million customers, up 11.8 percent year-on-year. Combined revenue generating units for cable television, internet access and telephony services reached 5.89 million, boosted 12.5 percent since end-October 2008, and the bundle ratio (average number of services received per subscribing household) increased to 1.81 from 1.80 a year earlier. J:Com's television subscriber base stood at 2.59 million in October, of which 2.29 million are digital television subscribers. The number of internet subscribers went up to 1.57 million from 1.36 million in October last year, and the number of telephony customers climbed to 1.73 million from 1.53 million.
Sony Corp. (NYSE:SNE) Chairman Howard Stringer forecast 3D movies, pictures and games will be the electronics maker’s next US$10 billion business, challenging investors and analysts who say the technology isn’t ready to become mainstream. 3D-related products, excluding content, will generate more than 1 trillion yen (US$11 billion) in the 12 months ending March 2013. The company will begin offering TVs, Blu-ray players and game consoles that adopt the technology starting next fiscal year. Stringer’s bet that 3D will spread from the movie theater to the living room highlights part of his strategy to revive a company that’s forecasting its first back-to-back annual losses in half a century.
Investments/ Ventures
Bain Capital agreed to acquire Citigroup’s (NYSE:C) Japanese call center operator BellSystem24 for 100 billion yen (US$1.1 billion) as part of its growth strategy. Citigroup Capital Partners Japan, a subsidiary of Citi, will receive cash consideration for its 93.5 percent stake in BellSystem24. The transaction is expected to close on December 30, 2009. BellSystem24 is a top player in the Japanese call center market. Citi has sold its Indian IT outsourcing arm Citi Technology Services to Wipro (NYSE:WIT) for US$127 million, and the Indian back office division to Tata Consultancy Services for approximately US$505 million.
Samsung Electronics (OTC:SSNLF) and LG Display (NYSE:LPL) have adopted similar investment strategies in the Chinese market, hedging the risk of overcapacity. Samsung Electronics had planned to set up a LCD panel plant in Suzhou, a city in eastern China's Jiangsu province. The project's investment budget amounted to US$2.25 billion. Samsung is now seeking to establish a joint venture with a registered capital of 800 million dollars to complete the project. The plant will produce LCD TV panels based on 7.5-generation technology. Prior to Samsung's announcement of its plan in October, LG Display will set up a 4-billion-dollar LCD production based on the 8-generation technology in Guangzhou, capital of south China's Guangdong Province. LGD has already set up a joint venture with the Guangzhou government and China TV Manufacturing Company, in which it holds 70 percent of the total equity. Based on the share holding proportion, LGD will invest US$2.8 billion in this project.
According to Korea Herald reports citing unnamed sources, Korean mobile content developer Entaz will become an MVNO in 2010. Entaz has signed a memorandum of understanding with KT, which will see the companies work together on MVNO-related issues. Entaz will also develop a portal downloadable by KT subscribers which will enable them to buy games and other mobile content. The Korea Communications Commission has been pushing for MVNO regulations as one of the measures to reduce prices in the telecommunications sector.
Hynix Semiconductor Inc. will again seek to sell part of their stake in the world's second-largest memory chip maker through an open bidding process. The move comes after Hyosung Group decided to drop its bid for a 28.07 percent stake in Hynix Semiconductor amid rumors its political ties influenced the bid. A shareholder consultive meeting will make a decision on the resale issue by November 25. An open bid will be held should 75 percent or more of the shareholders vote for it.
Information Technology
South Korea's exports in the information and technology sectors are expected to rise sharply next year as a global economic recovery would drive up corporate IT budgets. Lee Gam-yeol, vice president of the Korea Electronics Association, forecasts that South Korea's IT and tech exports will amount to US$133 billion next year, boosted 11.1 percent from this year, with the annual industry production expected to rise 7.7 percent from a year ago to 237 trillion won (US$205.3 billion) in 2009. Some market experts, however, have been skeptical about the forecast. Steve Ballmer, head of the U.S. computer software powerhouse Microsoft Corp. (NASDAQ:MSFT), earlier said a global economic downturn forced corporations to cut back on IT spending and corporations would still maintain a tight IT budget in the coming years regardless of the economic condition.
GS Home Shopping Inc. signed a contract to buy a stake in India's TV18 HSN Holdings Ltd. (NASDAQ:HSNI) to make inroads into the world's second-most populous country. Under the contract, GS Home Shopping will purchase a 15-percent stake in the holding company of an Indian cable TV shopping channel for 21.4 billion won (US$18.4 million).
Sina's (NASDAQ:SINA) net revenues climbed 7 percent quarter-on-quarter on an improving advertising market to reach US$96.4 million, surpassing the company's previous guidance of between US$91 million and US$94 million. Third quarter net revenues were 8.5 percent below one year ago. Sina's net income fell 11.6 percent year-on-year but increased 25.6 percent quarter-on-quarter to US$16.7 million in the third quarter. Advertising revenues was US$63.8 million in the quarter. Ad revenues boosted 10 percent and exceeded company guidance of between US$60 million and US$62 million.
Acorn International (NYSE:ATV) had net income of US$2.7 million for the third quarter of 2009, compared to a US$10.8 million loss in the third quarter of 2008 and US$11.4 million income in the previous quarter. Net revenues were US$91.8 million, up from US$71.1 million and US$49 million in the year- and quarter-ago periods, respectively. Direct sales net revenues declined 7.5 percent year-on-year to US$42 million, due to lower mobile phone sales. Given the divestiture of Yimeng in the second quarter, lower mobile phone sales and the higher cost of flash memory, Acorn lowered its full year forecast to net revenues in the range of US$280 million to US$290 million.
China Unicom’s (NYSE:CHU) average revenue per user (APRU) for its 3G services is rising, passing the 100 yuan (US$14.65) mark and more than double that of its GSM service. The company's GSM ARPU had fallen to around 41.6 yuan (US$6.08) in the first nine months of 2009. Unicom believes that there was still growth potential for voice services in China's rural areas. Unicom's 3G network covered 285 cities in China at the end of October, and would expand to 335 cities by the end of 2009. In the first half of 2010, the network would cover all cities and major towns in the country. Unicom and rivals China Mobile (NYSE:CHL), and China Telecom (NYSE:CHA) are launching 3G services this year, which will increase competitive pressure to attract subscribers to the more lucrative service. Rising competition and expenses associated with the 3G rollout were a prime reason that all three carriers had disappointing quarterly earnings last month.
JPMorgan(NYSE:JPM) has disposed 45.2 million shares of China Telecom, at HK$3.54 (US$.45) apiece, on 10 November 2009. The total consideration amounted to HK$160 million (US$20.6 million). JPMorgan's shareholding in the company has then dropped to 5.85 percent.
ZTE (OTCPK:ZTCOF) will take about a fifth of the global market for wireless mobile equipment based on the GSM standard, using financial assistance from Beijing to fund its rapid expansion. The company's revenue from GSM equipment sales had doubled over each of the last few years, making ZTE the world's third-biggest vendor behind global leader Ericsson and Chinese rival Huawei, Zhao Yizhe, vice-president in charge of GSM equipment told Reuters. His division was on track to match the doubling pace in the first three quarters of this year, and aimed to maintain a similar high growth rate in 2010. ZTE has risen from relative obscurity over the last decade to become one of the world's top sellers of equipment used to build mobile networks. Sales of equipment based on GSM account for about 10 percent of ZTE's total revenue and a third of its wireless equipment sales. Zhao’s division's contract sales this year would top 10 billion yuan (US$1.47 billion).
China Mobile Ltd.'s average revenue per user may be pressured further as the company adds customers in rural areas, but it will work to control costs as business growth slows. China Mobile, the world's biggest mobile operator by subscribers, said it will lower its capital expenditure in the coming few years. The company is working on an A-share listing in mainland China. China's government will allow foreign companies, including red chips like China Mobile, to list on the mainland's exchanges.
Huawei is building 25 networks worldwide based on next-generation Long Term Evolution (LTE) wireless technology, aggressively expanding in an area that may help to propel it past Ericsson to become the world's top telecoms equipment maker. Huawei was building commercial LTE networks for European carriers Telenor (OTCPK:TELNY) and TeliaSonera (OTCPK:TLSNF), and trial ones for the likes of Vodafone (NASDAQ:VOD) and T-Mobile, Ying Weimin, president of LTE products said. Huawei was also pursuing LTE business with two top U.S. carriers, Verizon (NYSE:VZ) and AT&T (NYSE:T), in the tough North American market where it has made few inroads to date. He expected the world's first commercial-use LTE networks to launch sometime in the second or third quarters of next year, aimed at serving growing consumer demand for faster speeds on wireless broadband services.
Media, Entertainment and Gaming
· Deputy director of State Administration of Radio Film and Television of China, Zhang Hongsen reports that China's domestic movie box office is expected to reach surge 40 percent in 2009, rising to become the world's third largest film producer. Zhang said that China's film industry, production and market capacity has been growing rapidly. China produced approximately 400 feature movies which made China among the world's top ten film makers. It is expected that production will reach 450 in 2010.
· Giant Interactive Group (NYSE:GA) will formally start its reform of property rights by establishing five subsidiaries. The company holds 51 percent shares in each subsidiary and the members of the projects' core team hold the rest 49 percent. These five subsidiaries have full decision-making autonomy, including the research and development (R&D) of projects and domination of the manpower, material and financial resources. The core team numbers and the parent share profits gained from each project in proportion to their respective contributions. The aim of the company's reform of property rights is to let the R&D teams become their own "boss", stimulating their entrepreneurial potential and to achieve win-win results with the subsidiaries.
Alternative Energy
ReneSola Ltd. (NYSE:SOL) had a third quarter net loss of US$10.2 million. Gross margin fell to 3.4 percent in the period as the company worked through higher cost inventory as wafer prices fell. Gross margin was 21.2 percent in the year-ago period and 5.1 percent in the second quarter of 2009; the company originally anticipated third quarter gross margin to be similar to that of the second quarter. Third quarter net revenues fell 34.7 percent year-on-year but shot up 70.6 percent quarter-on-quarter to US$140.9 million, topping the high end of company guidance of between US$130 million to US$140 million. Shipments climbed 71 percent sequentially to 146.9MW in the period, the highest quarterly shipments in ReneSola history.
[[LDK]] Solar Co Ltd agreed to sell a 15 percent stake in its Chinese polysilicon plant to Jiangxi International Trust and Investment Co Ltd for about US$219 million, lifting its shares as much as 14 percent after hours. LDK makes silicon wafers for the solar power industry and is working to ramp up a plant for polysilicon, a prime commodity in the solar industry, as part of its strategy to reduce costs. Prices for polysilicon and for solar panels have tumbled in the last year. The deal helps LDK in terms of alleviating their liquidity.
Canadian Solar Inc. (NASDAQ:CSIQ) recorded net income of US$25.3 million in the third quarter of 2009, or US$0.69 per diluted share, compared to net income of US$11.1 million in the year-ago period and US$17.7 million in the previous quarter. Gross margin was 16.3 percent in the three-month period, compared to 15.5 percent in the third quarter of 2008 and 20.2 percent in the second quarter of 2009. Net revenues for the quarter were US$213.1 million, up 87 percent sequentially but declined 15.6 percent from the year-ago period. Shipments climbed 113 percent quarter-on-quarter to hit a record 102.6MW. Canadian Solar reiterated fourth quarter shipment guidance of approximately 128-138MW with gross margin in the high teens, as well as previously issued full year guidance of between 295-305MW. Europe continued to be Canadian Solar's largest market in the third quarter, with sales growing 179 percent sequentially to US$186.6 million.
Information Technology
VanceInfo Technologies Inc. (NYSE:VIT) had net revenues of US$40.2 million in the third quarter of 2009, up 45.2 percent year-on-year. The company attributed the increase primarily to the expansion of its China business, which accounted for US$18.8 million, or 46.7 percent, of net revenues in the quarter. Research and development services produced 57.7 percent, or US$23.18 million, representing annual growth of 41.9 percent. VanceInfo generated a net income of US$5.8 million in the third quarter of 2009, an increase of 32.8 percent on an annual basis.
Kingsoft Corp. said that 3.03 million viruses were created affecting 1.24 million Web sites in China during the month of October. Viruses affected 20.81 million computers, while Trojan viruses affected 1.24 million Web sites in October. There has been a trend of planting viruses and Trojans in software add-ons and Web pages, and urged Internet users to be more cautious when clicking unknown sites and links online. China's National Computer Network Emergency Response Technical Team and Coordination Center estimated in June that viruses and related Internet security breeches cause over 7.6 billion yuan (US$1.11 billion) in losses to businesses annually.
Mobile/ Wireless
Alcatel-Lucent SA (ALU) said that the Asia-Pacific region, particularly India and China, will remain the company's major drivers of revenue growth. Revenue contribution from the Asia-Pacific region will likely rise further from the third-quarter's 19 percent, Sean Dolan, president for Alcatel-Lucent Asia-Pacific, told Dow Jones Newswires in an interview. Growth in the region will be driven by demand for convergence of fixed-line and wireless networks as carriers try to improve cost efficiencies, and demand for third-generation mobile services. The company is working with China Unicom Ltd., China Mobile Ltd., and China Telecom Corp. to combine their wireless and wireline networks as a way to improve cost.

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