Japanese Tech Stock Weekly Summary

by: IRG Ltd

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


• Parrot, a provider of wireless peripherals around the mobile phone, announced that it has opened a Tokyo liaison office dedicated to supporting its OEM customers in Japan. The company provides automotive connectivity solutions including Bluetooth telephony, echo-cancellation and noise reduction, USB connectivity and voice recognition to major audio equipment manufacturers. The company's Tokyo office will provide local technical support in order to facilitate the integration of Parrot technology into new audio platforms being developed in Japan.

• NTT DoCoMo (DCM) said it has agreed to sell its entire stake in Telargo Inc, a provider of location services in the U.S., to ULTRA Doo of Slovenia. Under the deal, ULTRA Doo, a major shareholder of Telargo, will acquire NTT DoCoMo's 49 percent stake in Telargo, making it a wholly-owned subsidiary of ULTRA. In 2005, NTT DoCoMo bought the stake in Telargo to expand its business overseas. The company, however, failed to pursue the expansion plan, which is now the reason for selling its stake.


• According to media sources, ADSL broadband service provider eAccess is set to form a capital and business alliance with USEN Corp, a Japan-based fiber-optic communications provider. The two sources said they look to the partnership as enabling them to compete more effectively with Japan’s leading broadband operator NTT. Under the proposed deal, eAccess would advise customers wishing to switch away from ADSL to fiber-optic services to use USEN, the fourth largest player in that segment. USEN holds a market share of 6.1 percent. If the transaction is consummated, eAccess would become USEN’s third biggest shareholder, behind the investment fund Unison Capital and broadcast group USEN, both of which hold nearly 40 percent of USEN Corp’s shares.


• Square Enix Co. (OTCPK:SQNXF), Japan's second-largest game software publisher, plans to acquire companies domestically or in countries including India and China to accelerate profit growth.
According to its president, acquisitions and alliance will be the “cornerstone of Square Enix’s growth strategy this year and the next.'' The last acquisition was made by the company in 2005, when it purchased Taito Corp., a Japanese arcade game maker. The company forecast a 3.3 percent rise in its net income to 12 billion yen (US$113 million) in the year ending March 31, and predicted a 0.6 percent decline in its sales to 162.5 billion yen (US$1.5 billion). It looks to an operating profit in the arcade business as hitting 350 billion yen (US$3.2 billion) this year, compared with a loss of 351 million yen (US$3.3 million) a year earlier. Its arcade division is expected to account for half of revenue and 17 percent of the expected 21 billion yen (US$197.4 million) in operating profit this fiscal year. Game software, the company's biggest revenue earner, is expected to contribute 27 percent of sales and 43 percent of profit.


• Sharp Corp. (OTCPK:SHCAY) reported a 5.5 percent rise in its quarterly operating profit to a record high of 51.9 billion yen (US$487 million) from 49.2 billion yen (US$461.8 million) a year earlier. The company posted a 3.8 percent rise in its net profit to 29.6 billion yen (US$277.8 million) on sales of 921.2 billion yen (US$8.6 billion). For the full year to March, the company kept its outlook unchanged, topping market expectations. Sharp also forecast an operating profit of 190 billion yen (US$1.8 billion), up from 186.5 billion yen (US$1.7 billion) a year earlier. At present, Sharp is building the world's largest LCD panel factory in western Japan to boost efficiency and counter falling prices.


• KDDI Corp. posted a 12.4 percent rise in its net profit for the nine months to December to 214.8 billion yen (US$2 billion) from the same period last year. Its operating profit went up 17.4 percent to 371 billion yen (US$3.4 billion). The company said it has registered almost 1.9 million new customers in the nine months to December. KDDI reported its revenue posting a 7.2 percent growth to 2.6 trillion yen (US$24.4 billion). The company reported a 1.2 million addition in the number of subscribers to its mainstay au cellphone service over the nine-month period to hit 29.2 million at the end of December. The company is forecasting that its au subscriber base will reach 30 million by the end of March. KDDI said it now expected revenue of 3.5 trillion yen (US$3.5 trillion). It also changed its forecast of operating profit to 414 billion yen (US$3.8 billion) for the year to March from 390 billion yen (US$3.6 billion).


• According to industry sources, Netyear Group Corp., a Japanese IT marketing service company, has received approval to list on the Tokyo Stock Exchange's Mothers. The company will offer 10,728 shares to the public in its initial public offering. Of those, 6,000 are newly issued shares and 4,728 are shares currently held in private. The company said it is considering publicly offering an additional 1,600 shares in the event of exceptional demand. The company expects to generate 168 million yen (US$1.5 million) from the offering to use the fund to build new facilities. The company will offer all the shares through the book-building method. For the current fiscal year through March 2008, the company forecasts a net profit of 329 million yen (US$3 million) and revenue of 3.3 billion yen (US$31 million). Last fiscal year, the company posted a net profit of 275 million yen (US$2.5 million) and revenue of 2.5 billion yen (US$23.4 million). Daiwa Securities SMBC is the lead underwriter.

• NTT (NYSE:NTT) announced its plans to set up an investment fund, NTT Investment Partners Fund LP, that will target start-ups both inside and outside Japan. The fund will start in March. NTT said it aims to use 99.8 per cent of the 10 billion yen (US$93.8 million) funding, with two other firms remaining unidentified as each contributing 0.1 per cent. Industry observers note that this is NTT’s first foray into investing in start-ups. The fund will take stakes in privately-held firms with cutting-edge technologies and expertise in the information and communications fields. The announcement also said that, in addition to generating investment returns, the investment is seen as serving as a conduit for expanding the NTT group's business operations and contributing to innovation.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.