Japanese Tech Stock Weekly Summary (7/21-7/27)

Includes: CAJ, DCM
by: IRG Ltd

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

• • •


  • Canon Inc. (NYSE:CAJ) said profit fell 13 percent in the second quarter after a stronger yen against the dollar eroded the value of overseas sales. Net income dropped to 107.8 billion yen (US$999 million) in the three months ended June 30, from 123.9 billion yen (US$1.1 billion) a year earlier. Sales declined 1.9 percent to 1.1 trillion yen. Canon generates about 80 percent of its sales outside Japan. The yen's 15 percent gain against the dollar over the year to June 30 reduced the value of its overseas sales in local currency terms. The company faces a slowing economy in the U.S., its biggest overseas market for office equipment. The company kept its full-year net income forecast at 500 billion yen (US$5 billion) and raised it sales projection for the year ending Dec. 31 to 4.59 trillion yen (US$43 billion).


  • Japan Communications signed a deal with ZTE Corp. for the supply of the 3G market in Japan with WCDMA data cards for third-generation mobile telephony starting next month. In collaboration with its local partner, Japan Communications aims to provide local telecom customers with comprehensive range of advanced 3G network services. Financial terms of the deal were not disclosed.
  • KDDI Corp. said its group net profit for the April-June quarter dropped 12.2 percent from a year earlier to 72.5 billion yen (US$671.7 million) as it lost subscribers to rivals like Softbank Mobile Corp. and NTT Docomo Inc. (NYSE:DCM). In a consolidated earnings report for the first quarter of the current business year ending March 2009, KDDI said its pretax profit fell 12.5 percent to 124.8 billion yen, on revenue of 870.5 billion yen (US$1.2 billion), up 3.1 percent. The company's subscriber numbers fell by about 34,000 over the three months through June after the termination of its Tu-Ka mobile phone service in March and the short-circuiting of some of its handset battery packs. In addition to the drop in customers in the first quarter, higher marketing costs and losses at its fixed-line communication business also weighed on the firm's quarterly earnings. KDDI left its group earnings outlook for the whole of fiscal 2008 unchanged. It is expecting a net profit of 250 billion yen (US$2.3 billion) in fiscal 2008, up 14.8 percent from the previous year, and a pretax profit of 440 billion yen (US$4.1 billion), up 7.9 percent, on revenue of 3.7 trillion yen (US$34.3 billion), up 2.9 percent. The company is anticipating an increase in its full-year dividend payment to 11,000 yen (US$102.00) per share from 10,500 yen (US$97.33) in the previous year.
  • NTT DoCoMo's quarterly operating profit has likely risen substantially from a year ago due to smaller subsidies paid to retailers to keep cellphone prices low, the Nikkei business daily said. Operating profit is expected to have come in between 250-300 billion yen (US$2.3-2.8 billion) in the fiscal first quarter to June, up from 203.9 billion yen (US$1.9 billion) a year earlier. For years, DoCoMo and other Japanese wireless carriers had kept handset prices low to win customers and tried to recoup heavy costs through calling and other service fees. But NTT DoCoMo last November introduced a new sales strategy that lowered calling fees and raised handset prices, reducing the burden of subsidy payments to retailers. No NTT DoCoMo officials were immediately available for comment.


  • Roundbox, a provider of mobile broadcast software, and CTC, a provider of IT solutions and outsourcing services, have reached an agreement for CTC to distribute Roundbox mobile broadcast solutions throughout Japan. Prior to this agreement, the companies have successfully demonstrated live mobile broadcast applications using FLO technology at numerous trade shows and events. Additionally through their collaboration, they have delivered customized demonstrations for customers, including KDDI, which incorporate operator branding, local language and advertising banners.

Media, Entertainment and Gaming

  • Suo Cable Net, a Japanese cable-TV operator, has chosen Alcatel-Lucent to design, integrate, and deploy a Gigabit Passive Optical Network [GPON] solution. This new network, which will enable Suo Cable Net to begin rolling out high-speed internet and video services this month, will be the first commercial GPON deployment in Japan. Alcatel-Lucent (ALU) will deploy its 7342 Intelligent Services Access Manager Fibre-to-the-User [ISAM FTTU] solution, leveraging GPON technology to multiplex video and data services onto a single fibre. This solution supports a 2.5 Gbps downstream capacity, which will enable the highest bandwidth mass-market offering, allowing the service to deliver more content at higher speeds.

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Tagged: Japan
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