Japanese Tech Stock Weekly Report

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Includes: MUFG, NTDOY, RICOY
by: IRG Ltd

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

Internet

Yahoo Japan Corp. reported a rise of 20 percent in its quarterly profit as it signed up more users to its auction site and attracted more stores on its online mall. The company said its net income rose to 15.2 billion yen (US$125 million) in the three months ended December 31 against 12.7 billion yen (US$104.4 million) a year earlier. Yahoo Japan, which competes with web firms such as Rakuten Inc. and Google Inc. (NASDAQ:GOOG), said the total value of transactions at its online auction, shopping and other services jumped 14.7 percent in calendar 2006 from a year earlier, in contrast with sluggish wages and spending in the overall economy.

Market sources said that Mitsubishi UFJ Financial Group Inc. (MTU) is in talks regarding its plan to acquire about a 15 percent stake in major online brokerage Matsui Securities Co. in a bid to strengthen its retail investor services. The sources said MTU and Matsui are putting the final touches on the possible capital alliance. The financial group, whose holdings include Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Securities Co., also has an approximately 30 percent stake in online brokerage Kabu.com Securities Co. The group is considering raising its stake in Kabu.com as well. Analysts are saying this move to strengthen cooperation with the two online brokerages may trigger further consolidation in the banking and brokerage sectors. As of the end of 2006, SBI E*trade Securities Co., Japan's largest online brokerage, had about 1.3 million accounts, whereas Matsui had about 640,000 and Kabu.com had about 540,000.

Media, Entertainment and Gaming

Nintendo (OTCPK:NTDOY) attributed to the huge year-end sales of the Wii game console to its massive 43 percent rise in its profit for the nine months to December. Nintendo recorded group net profit of 131.9 billion yen (US$1 billion) in the first nine months of the fiscal year, up from 92.2 billion yen (US$713 million) the same period a year earlier. The company posted a 73 percent growth in sales to 712.6 billion yen (US$5.8 billion) during the April-December period from 412.3 billion yen (US$3.4 billion) the previous year. Nintendo said it has sold 3.1 million Wii machines worldwide, 1.2 million in the Americas, and 1.1 million in Japan. A company spokesperson reported that the company had met its target of 4 million units shipped by the end of last year, with Nintendo well on its way to reaching its target of global shipments for 6 million Wii machines by March 31, 2007. Earlier this month, Sony said it shipped two million PlayStation 3 machines worldwide by the middle of this month, falling about two weeks behind its initial plan in shipments in Japan. The machine’s launch in Europe has been delayed until later this year. Sony is also targeting shipping six million PS3 machines by March 31.

Nintendo Co. announced that it has started offering a new service that feeds national and international news headlines to its recently launched Wii console. The Wii News Channel was launched in Japan ahead of schedule and would be available in the U.S immediately. In Japan the service carries news stories from a variety of sources through a feed from Internet portal Goo. In the U.S. the Associated Press will provide the news. The service is accessible from the Wii's main menu after a software refresh. Nintendo also offers a web browser for download, and an Internet connection is needed to use the service. A button for the news channel sits alongside another for a companion weather service, which provides access to forecasts and other data. The services are part of Nintendo's attempt to make the Wii about more than just gaming.

Mobile/Wireless

A coalition of government, industry and research organizations in Japan has proposed the adoption of a common platform based on Public Key Infrastructure [PKI] authentication for higher security on mobile-phone networks, bypassing ID and password-based security. The group announced that it has developed the technology with the aim of providing a common platform for secure mobile-phone communications in Japan. The group comprises the National Institute of Information and Communications Technology [NICT], the mobile IT Forum [mITF], Hitachi, NTT Docomo, KDDI R&D Laboratories and NEC Corp. Hitachi, DoCoMo, KDDI and NEC have been working for three years to develop the mobile security technology, which is funded with about US$5 million from NICT.

Hardware

Ricoh (OTCPK:RICOY) announced its plan to acquire IBM’s (NYSE:IBM) digital business printer operations for US$700 million in April, a move that is seen as transforming it into the world’s largest maker in the segment. With the acquisition, Ricoh aimed to tap growing demand for printers that could receive data directly from computers and produce large volumes of documents. Under the plan, Ricoh would take over all global sales and maintenance service divisions of IBM’s digital business printer business and also obtain IBM’s employees and engineering staff engaged in developing the software that controls the printing process... Ricoh has entered the digital business printer market following its acquisition in 2004 of Hitachi’s (HIT) printer subsidiary.

According to the Japan Electronics and Information Technology Industries Association, shipments of personal computers in Japan fell 3 percent in 2006 from the previous year to 12.3 million units, down for the first time in four years. The industry body indicated that shipments fell as consumers opted to spend more on buying flat-panel television sets and on traveling than on PCs. It also ascribed the decline to the sluggish year-end sales of PCs as people decided to wait for the release of Microsoft Corp.'s Windows Vista, the latest version of Windows operating systems to be put on sale on Jan. 30. In the January-March period in 2006, domestic shipments of PCs rose 3 percent from the previous year, but fell 3 percent in the April-June quarter, 4 percent in July-September period, and 10 percent in the October-December period. The association looks to an increase in the demand for PCs after the debut of Windows Vista, predicting a more than 10 percent year-on-year rise in shipments in the January-March period in 2007.