Japanese Tech Stock Weekly Report: Dec. 13-30

by: IRG Ltd

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


According to the country’s Ministry of Internal Affairs, the number of subscribers to high-speed fiber-optic network services in Japan topped 7 million for the first time ever at the end of September. The ministry explained in the report as ascribable to growing replacement demands. The report said a total of 7.1 million were subscribing to fiber-optic services as of the end of September, up 848,953, or 13.5 percent, over the three months earlier. The data showed more subscribers favoring faster fiber-optic services over asymmetric digital subscriber line and other broadband Internet access services in relatively large cities. The ministry report noted that the number of subscription to ADSL services went down by 0.7 percent in the three months through September to 14.3 million for the second consecutive quarterly.

Yahoo Japan said it has joined the Wi-Fi hotspot business and begun offering its 6.3 million registered users in Japan access to a nationwide wireless LAN network. Yahoo said the network makes use of the hotspot network built by sister company Softbank Telecom, which currently offers around 3,500 access points throughout the country. Many of the access points are located in cafes, railway stations, and hotels. The service is available to users holding a Yahoo Premium membership to the portal, which costs 294 yen (US$2.5) per month and brings with it access to a number of member- only services including bidding and selling on the company's leading auction site. The company presently has 6.3 million such members. Yahoo Japan already offers its name to a hotspot service, which is only available as an option to customers signing up for Softbank BB's Yahoo BB broadband service. The new service announced does not, however, require subscription to a wired broadband provider. Softbank Telecom is a subsidiary of Softbank (OTCPK:SFTBF), which is a major shareholder in Yahoo Japan.

Media, Entertainment and Gaming

A portal site, dubbed 47NEWS, carrying news provided by a total of 52 newspaper companies across Japan, will open soon, featuring a function to search news from a map of Japan on its web site. The portal site will display new in the Japanese language written by some 10,000 reporters of the 52 newspaper companies based in the country’s 47 prefectures. The offering marks the first online news site of such a scale in Japan that will allow consumers to search news from domestic newspapers on a single website. Other features of the website include a keyword ranking service that shows what is the most written about theme of the day's news. By clicking the word, users can see a series of news reports related to the word. Photos taken by the newspapers will also be shown on a Japan map and users can vote for their favorites. Videos will also be available in the portal site. Kyodo News will provide overseas and major city news for the top news section, and local newspapers will provide news stories from the prefectures. Press Net Japan, which is involved in operating the website, said that 47NEWS created under the network of the 52 newspaper companies across Japan is seen as boosting the ability of local newspapers' to transmit information.

Publishing house Kotonoha announced that that it will offer book downloads employing the same technology that is used to purchase online music. The publisher said the books-on-tape will be cut in sections of up to eight minutes each. Kotonoha has a current catalog of 100 titles, with the company aiming to sell each of its works to 1,000 customers per year. Downloadable books are already available in the market but this will mark the fist time that a publisher has offered audio books on mobile phones. Electronic publishing is a growth industry in Japan, with a particularly strong market for manga cartoons sold via mobile telephone. An earlier development saw leading publisher Kadokawa entering into a partnership in electronic publishing with Japan's top mobile operator NTT DoCoMo (NYSE:DCM) and electronics giant Matsushita (NYSE:MC), which has launched an "electronic book" with a color screen and multimedia functions.

Boston.com, the web site of The Boston Globe, announced the signing of a content-sharing agreement with an established Japanese language baseball site. Under the agreement, excerpts of baseball coverage in the newspaper, on Boston.com and on the Boston Dirt Dogs fan site will be translated into Japanese and posted on Go-RedSox.com. The Globe and Boston.com are owned by The New York Times Co., which also is a part owner of the Red Sox.


The Tokyo Stock Exchange [TSE] announced its selection of Fujitsu (OTCPK:FJTSY) to develop its next-generation trading system, saying that the next-generation system will serve as the foundation for the public securities market. The selection follows a period of open competition for the contact that began in August. The exchange said it has selected Fujitsu to develop a system with functions at the world's highest level in terms of speed, reliability, and scalability. The TSE also said it believes that the construction of a next-generation trading system will help make its market more reliable and convenient for market users, particularly investors and trading participants.

Microsoft Corp.'s (NASDAQ:MSFT) Japan unit revealed that it will offer users of its new Vista operating system the ability to print out digital photographs through kiosks in thousands of Seven-Eleven Japan Co. Ltd. convenience stores across the country. The service is linked to the photo album software in Windows Vista and begins with a user selecting the photos to be printed. The photos are then uploaded to a server operated by Fuji Xerox Co., which manufactures and operates the machines in 7-Eleven stores. The companies said the offering is for users who do not have home printers or who want to distribute a number of copies of the same image after an event. The companies said the machines that will be used for the Vista printing service were installed into all 7-Eleven outlets in 2005 and offer a range of services including copying, photo printing from memory cards, printing out of tickets purchased online and faxing. As of the end of November, there were more than 11 thousand 7- Eleven stores in Japan.


Marumae Co., a Japanese maker of manufacturing equipment for LCDs, semiconductors, and solar batteries, announced that it has received approval to list on the Tokyo Stock Exchange's Mothers market. The company will offer 2,400 shares to the public in its IPO. Of those, 2,000 are newly issued shares and 400 are shares currently held in private. Marumae will offer all the shares through the book-building method. The company said it expects to net 862.5 million yen (US$7.2 million) from the offering. Of the IPO proceeds, it plans to use 316 million yen (US$2.6 million) for capital spending, 257 million yen (US$2.1 million) for repayment of debt and the remaining for working capital. For the current fiscal year through August, the company forecasts a parent pretax profit of 260 million yen (US$2.1 million), net profit of 153 million yen (US$1.2 million), and sales of 1.3 billion yen (US$11 million). Last fiscal year, the company posted a parent pretax profit of 141.1 million yen (US$1.1 million), net profit of 84.8 million yen (US$713,000), and sales of 930.8 million yen (US$7.8 million). Monex, a major online brokerage house, is the lead underwriter of the offer.

Sharp Corp. (OTCPK:SHCAY), the country’s largest maker of LCDs and mobile phones, announced the doubling of its production of large-sized LCD screens in January in a bid to meet demand for its Aquos flat-panel televisions. The company said its new line in central Japan will double Sharp's large-screen output to 30,000 glass substrates a month. The glass plates can each make eight 40-inch panels or six 50-inch screens. Earlier in October, Sharp raised its annual sales forecast for LCD panels to 1 trillion yen (US$8.7 billion) from a previous projection for 980 billion yen (US$8.2 billion). Sharp said it’s focusing on gaining market share overseas. The company gets about 22 percent of sales from LCD panels, and about 40 percent from the division that makes the LCD TVs and mobile phones. According to DisplaySearch, some 42 percent of LCD TVs sold in Japan during the quarter ended June 30 were made by Sharp, compared with Sony Corp., which had an 18 percent share.

Canon Inc. (NYSE:CAJ) and Toshiba Corp. (OTCPK:TOSBF) announced that their decision to consider delaying or even altogether scrapping their plan to build a US$1.7 billion display panel plant in Japan. The decision stems in part from a patent dispute with Nano-Proprietary Inc. In 2004, Canon and Toshiba formed a joint venture, SED Inc., in a bid to develop and make surface-conduction electron-emitter display [SED] panels, which are thinner and consume less energy than liquid crystal display [LCD] and plasma panels. In 2005, Texas-based Nano-Proprietary filed a lawsuit against Canon, claiming that the use of its patented flat-panel technology at SED Inc. is not covered by any license agreement with the Japanese company. Canon looks to SED TVs as a generator of growth even as analysts said that Toshiba could announce its decision on the plant in January. Construction of the plant was scheduled to begin early next year.


Boston-based Buyout-firm Bain Capital LLC and private-equity firm Japan Industrial Partners announced that it has offered US$550 million to buy Japan's SunTelephone Co, a distributor of telecommunication equipment. The announcement was confirmed by SunTelephone president. Under the deal, shareholders would get 1,120 yen (US$9.4) a share, a 19 percent premium over the average closing price of the shares over the last six months. This year, Bain raised a US$10 billion global- buyout fund. It made its first Japanese investment as an end to more than seven years of falling prices in the world's second- biggest economy encouraged businesses and consumers to spend more. SunTelephone was established in 1948 and has focused on telephone- exchange equipment since 1962. It leases other products as well. Japan Industrial Partners was founded in November 2002 and buys units of large Japanese companies. Earlier in June, Bain acquired MEI Conlux, Japan's biggest maker of devices that recognize coins and bills used for vending machines.

The country’s Ministry of Internal Affairs and Communications [MIC] reported that the number of subscribers to fixed-line telephone services posted a 3.6 percent decline year on year to 49.5 million as of the end of this September, marking a drop below the 50 million mark for the first time since the survey began in March 1989. MIC ascribed the drop to a growing number of people and corporations switching to use of cut-rate Internet protocol telephony services. The report showed also that subscriptions to IP phone services registered a surge of 33.1 percent to 13 million during the same period. According to ministry data, the total number of subscriptions to mobile phone services including cellphones based on a personal handy-phone system and non-PHS phones climbed by 5.4 percent to 98.6 million.


Elpida Memory Inc. announced that it has initiated the mass production of computer memory using cutting-edge 70-nanometer processes, with the shipment taking place by March of next year. Elpida, which makes dynamic random access memory [DRAM], said that starting capacity would be few thousand wafers per month, eventually raising it to a 70-nanometer production capacity at its plant in western Japan, depending on demand. Earlier Elpida and Taiwanese partner Powerchip Semiconductor Corp., announced that they plan to invest up to US$15.5 billion on a DRAM memory chip joint venture, with the two firms indicating that they will together work to develop 50-nanometre processes. Elpida and Powerchip also revealed their plan to list the joint venture in three years, targeting a market most likely outside the country.