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IRG Technology, Media and Telecommunications Weekly Market Review (Week of 2 – 10 Oct 2010)

Japan
Semiconductor    
         Elpida Memory Inc. will sell 60 billion yen (US$728 million) in convertible bonds aimed at local private investors. The five-year 0.5 percent bonds will be used to repay debt and upgrade semiconductor-manufacturing equipment. The company faces pressure to keep up with industry leader Samsung Electronics Co., which is spending an estimated US$10 billion annually to widen its lead in chip production. The bonds will be sold at 102.5 percent of face value, and the conversion share price will be set between Oct. 19 and Oct. 21 at a premium of 29 percent to 34 percent.
Mobile/ Wireless
         Fujitsu and Toshiba successfully ventured their mobile phone business partnership. The two signed a memorandum of understanding on the deal in June and definitive contract in July. Toshiba completed the transfer of its mobile phone operations to a new company called Fujitsu Toshiba Mobile Communications, and Fujitsu completed its acquisition of shares in the new company, which will operate under Fujitsu management. It is owned for 80.1 percent by Fujitsu and 19.9 percent by Toshiba with around 530 employees.
Media, Entertainment and Gaming
         Dentsu Inc. will venture with Salesforce.com to offer corporate clients integrated marketing management systems over the internet. The cloud computing service will cost clients less than 100 million yen (US$1.2 million) for 100 users in the first year. Based on client needs, the partners will build a system that manages various functions all at once, such as product development, production, advertising, sales and account management. Dentsu offers data services mainly via subsidiary Information Services International-Dentsu Ltd. The segment's sales came to 61.2 billion yen (US$746.1 million) in fiscal 2009, just 3 percent of overall group sales. Tapping its strength in advertising and marketing, Dentsu intends to raise this ratio to 10-20 percent to match major U.S. and European ad agencies.
Telecommunications
         Japanese mobile operators added a total of 601,900 new mobile customers in September to bring their total to 115.40 million mobile subscribers, according to Telecommunications Carrier Association (TCA). Softbank again led in subscriber additions during the month as it added 332,600 new customers to reach a total of 23.47 million. NTT Docomo gained 109,400 new subscribers to bring its total to 56.89 million, while KDDI ended the month with 32.29 million subscribers after adding 91,400 new customers. Emobile attracted 68,500 new customers to end September with a total of 2.74 million customers. Troubled PHS provider Willcom shed 39,500 customers, which brings the company's total to 3.78 million.
 
Korea
Hardware
      Samsung Electronics Co. sold more than 5 million units of the Galaxy S, its flagship smartphone running on the Android operating system, since its global launch in June. Samsung delivered 2.1 million Galaxy S phones to the U.S., 1.3 million to South Korea and another 1 million to Europe. The company sold a total of 4.51 million units of the Android-based phone in the July-September period. Along with 530,000 units sold in June, the sales stood at 5.04 million units as of September. The company expects to achieve its 10 million sales objective before the end of this year. The mobile phone business is expected to report an operating margin of at least 10 percent for the third quarter as robust sales of lucrative smartphones offset price declines in conventional cell phones.
 
China
Internet
         Online sales of flights and hotel bookings in China's burgeoning travel market enjoyed a seasonal boom. The number of orders during the Mid-Autumn Festival and the National Day holiday had increased year-on-year, especially for hotels and flights to Shanghai, where the World Expo was held this year. Taobao.com had total sales of flight tickets, hotels and entrance tickets on Taobao have increased by 40 to 50 percent since August. The flights sold on its travel platform numbered 10,000 every day. More than 200 travel agents have set up online stores on Taobao since May. iResearch Consulting Group said total online sales of flight tickets, hotel services and package travel products are expected to reach 4.75 billion yuan (US$709.91 million) this year.
Telecommunications
         The number of China Unicom's 3G users has surpassed the 10 million mark. The carrier had built the world's largest WCDMA networks and now held the leading position in the world in terms of user numbers and development. The number of China Unicom's 3G users increased 1.01 million in August. The increases of 3G users in May and June also exceeded 1 million, at 1.023 million and 1.032 million respectively. The number of mobile phone subscribers in China broke through 800 million to reach 805 million, with a total of 25.2 million 3G users on the networks.
Media, Entertainment and Gaming
·          China's Three Networks Convergence project is driving the expansion of the cable STB market, with shipments set to rise by nearly 25 percent this year, according to a study by iSuppli. China's domestic unit shipments of cable STBs will amount to 25.1 million units this year, up 24.8 percent from 20.1 million in 2009. The second quarter will generate the growth of the year, as provincial cable television operators accelerated their subscriber additions and small carriers pushed the migration of customers from analogue to digital service. The cable STB market grew to 6.8 million units in the second quarter, up 34 percent from 5 million during the same period in 2009. More than 75 percent of domestic cable STBs shipped in the second quarter can support interactive functions, such as VoD.


Disclosure: Author holds no positions in the stocks mentioned