• D2 Communications Inc, the JV between NTT DoCoMo Inc and Japanese advertiser Dentsu Inc, has invested in Singapore headquartered mobile marketing firm Affle, which claims to reach 4.5 million users with its ads, products and services. The terms of the deal are not disclosed. Affle has been backed by Bennett Coleman Company Limited (BCCL) and software giant Microsoft, among others. Affle's flagship product is SMS2.0, an application that enhances messaging experience by offering colours, emoticons and promotions. SMSLive is the next version of SMS2.0 and enables social networking and search. Affle also offers the Pinch Instant Messenger for smartphones and mobile coupon app Coufon. D2 has the rights to sell all inventories on NTT DOCOMO, a Japanese mobile service provider with over 57 million subscribers. Its clients include mixi.jp, gree.jp, Yahoo Mobile and the popular Japanese mobile social network Mobage Town. The company has existing partnerships with Hakuhodo, Asatsu-DK, CyberAgent, Opt and Septeni.
• Emobile’s user base exceeded 3 million subscribers. In March 2007, the company launched HSDPA data services with a download speed of 3.6 Mbps. In March 2008, the company added phone services, which currently cover 97 percent of national metro areas and 90 percent of the total population. Emobile now offers data download speeds of up to 42 Mbps and upload speeds of up to 5.8 Mbps.
• KDDI will lower interconnection fees by 27.3 percent. The company will charge JPY 6.24 (US$.075) per minute for local calls in fiscal 2010, with the new fees applied retroactively. KDDI charged JPY 8.58 (US$.104) per minute, the Nikkei writes. This is due to the revision in the communications ministry's guidelines. Communications providers can no longer include their operating expenses in their access fee calculations. NTT Docomo cut fees by up to 35.6 percent and Softbank will reduce its access fees as well.
• Nippon Telegraph & Telephone Corp.’s net profit surged 4.6 percent in the three months through December, due mainly to solid profits in its optical fiber broadband business as well as data communication services for corporate clients. NTT said net profit for the fiscal third quarter surged to 143.1 billion yen (US$1.7 billion) for the same period a year earlier. Operating profit surged 12 percent to 338.4 billion yen (US$4.1 billion), as revenue surged 0.6 percent to 2.544 trillion yen (US$31 billion). For the full fiscal year through March, NTT continues to forecast a 1.6 percent rise in net profit to Y500 billion yen (US$6.08 billion), a 5.6 percent rise in operating profit to 1.18 trillion yen (US$14 billion) and a 0.4 percent drop in revenue to 10.14 trillion yen (US$123 billion).
• NTT DoCoMo expects at least doubling of sales of smartphones in fiscal 2011 to 6 million units, a third of total handset sales. Sales of smartphones are on track to reach 2.6 million units in fiscal 2010, which would be twice the company's original goal. Products like the Galaxy S smartphone from Samsung Electronics are selling well for DoCoMo, and demand for the Regza Phone made by Fujitsu, which has merged its handset operation with Toshiba, was so strong that DoCoMo asked Fujitsu to boost production by several hundred thousand units. DoCoMo sees to add the Xperia Arc made by Sony Ericsson Mobile Communications to its lineup of smartphones by the end of March, and a number of handset makers are also gearing up new smartphone launches for fiscal 2011, including Panasonic Mobile Communications and NEC Casio Mobile Communications.
• Softbank Corp. raises its full-year operating profit forecast by 20 percent as the popularity of the iPhone and iPad continued to help Japan's only carrier of the Apple products win new customers and boost revenue from expanded data traffic. For the October to December quarter, Softbank had its group net profit surged nearly three-fold to 65.46 billion yen (US$796 million). Operating profit for the fiscal third quarter surged 23 percent to 166.64 yen (US$2.02), as revenue surged 13 percent to 784.88 billion yen (US$1.03 billion).
• Sony Corp. will acquire Seiko Epson Corp.’s Chinese liquid-crystal-display subsidiary for 775 million yuan (US$118 million). The amount was determined primarily based on Suzhou Epson's inventories corresponding to the orders already placed by the Sony Group as well as the cash and deposits owned by Suzhou Epson. The Sony Group expects that the acquisition of Suzhou Epson will enhance the speed and efficiency of business operations of the Sony Group's small- and medium-sized TFT LCD production. The transaction will be completed in the first half of the year ending March 31, 2012.
• Sony Corp. had third-quarter profit that exceeded analyst estimates. The company had net income of 72.3 billion yen (US$886 million) in the quarter ended Dec. 31. Sony’s product group that makes PlayStation games had profit at least doubled to 45.7 billion yen (US$556 million), due to cost reductions to make the PS3 console and surged sales of game titles. That cushioned a slump in TV prices, which eroded earnings at Samsung Electronics Co. and Panasonic Corp.
• Panasonic Corp. ‘s profit missed analysts’ estimates after falling prices extended losses at the main TV operations. Net income boosted 24 percent to 40 billion yen (US$491 million) in the third-quarter ended Dec. 31. The company will probably fail to meet its goal of turning TVs profitable in the six months ending March 31, Chief Financial Officer Makoto Uenoyama said. Panasonic joined Samsung Electronics and LG Electronics in posting deteriorating results from their TV divisions in the past quarter as competition intensified. Third-quarter operating profit declined 5.6 percent to 95.3 billion yen (US$1.2 billion). Panasonic will sell as much as 500 billion yen (US$6.08 billion) of bonds to refinance short-term debt. Third-quarter profit at the main audio-visual product division fell 1 percent to 39.9 billion yen (US$485 million) as sales of plasma TVs dropped 13 percent. Income from the components division tumbled 81 percent on lower demand for chips used in computers, TVs and cameras.
• Hitachi Ltd. raised its full-year profit forecast by 15 percent with net income of 230 billion yen (US$2.8 billion) in the year ending March 31. That exceeded Hitachi’s 200 billion yen (US$2.4 billion) projection in November. Hitachi will have its first annual profit in five years as it eliminates money-losing units and focuses on profitable operations including industrial machinery and infrastructure such as power plants. The company kept its full- year sales forecast unchanged at 9.3 trillion yen (US$113 billion).
• Casio Computer Co. swung to a group net profit in the April-December period dueto improved margins on the back of cost cuts and restructuring in its cell-phone handset business. The company, known for its G-Shock brand of watches, had a group net profit of 4.65 billion yen (US$56 million) in the nine month period. Sales fell by 16.1 percent to 256.79 billion yen (US$3.1 billion), as operating profit stood at 9.09 billion yen (US$110 million). The improved profitability came after the company changed the structure of its cell-phone handset joint venture with Hitachi Ltd. in June 2010. The two companies integrated their handset operations with NEC Corp., leading to a reduction in Casio's stake in the venture from 51 percent to 20 percent.
Media, Entertainment and Gaming
• Softbank acquired a 35 percent equity stake in Shanghai-based Synacast, also known as PPLive, for about 20 billion yen (US$244.8 million) through a private placement of shares. Softbank becomes the top shareholder in Synacast, the operator of a leading online television service in China, adding to the list of its investments in Chinese Internet companies. Softbank also holds an equity interest in Chinese internet giant Alibaba Group Holding Ltd., the parent of retail web site Taobao. Softbank and Synacast will consider partnerships in broadcasting, e-commerce and other areas. They will also work together on streaming TV programming beyond Chinese borders. The company operates an online TV service in China called PPTV with 200 million users and 105 million active monthly users. By collaborating with TV stations and premium content providers in China, PPTV provides online live streaming and video-on-demand services for most popular TV programmes free of charge. It also distributes paid contents such as movies, entertainment and educational programmes. The service also includes social functions such as collaboration with social networking sites, chatting, 3D viewing, and multi-window viewing.
• Net profit surged at four of Japan's five major commercial broadcasters for the nine months ended Dec. 31, boosted by robust demand for advertisements aired between programs. Fuji Media Holdings Inc. was among the four. Tokyo Broadcasting System Holdings Inc. had a net profit decline due to a valuation loss on its securities holdings. Three of the five saw sales surge as demand for ads recovered in a range of industries, including automobiles, financial services and cellular phone games. But demand for sponsorship ad inserts during programs was sluggish. Only TV Asahi Corp. enjoyed an surge in such revenue.
• Dena had third quarter net sales of 29.49 billion yen (US$359 million), as the company sold more virtual goods in social games. Operating income went up 182 percent to 14.75 billion yen (US$179 million). Net income for the quarter ended 31 December was 8.16 billion yen (US$99 million). For the full year, Dena expects sales of 113 billion yen (US$1.4 billion), and a net income of 30.70 billion yen (US$373 million).
• Fujitsu lowered its outlook for results in the fiscal year to March, citing a delayed recovery in the Japan IT market and lower profitability on some projects outside its home market. The sales outlook was cut by 100 billion yen (US$1.1 billion) to 4.57 trillion yen (US$55.6 billion). The operating profit outlook drops by 40 billion yen (US$487 million) to 145 billion yen (US$1.7 billion), and net profit guidance was cut by 20 billion yen (US$243 million) to 75 billion yen (US$913 million). Fujitsu had revenues for fiscal Q3 to December of 1.096 trillion yen (US$13.3 billion). Operating profit declined to 21.2 billion yen (US$258 million), as net profit improved to 16.5 billion yen (US$201 million) due to lower restructuring charges.
• LG Uplus Corp. will invest KRW1.116 trillion (US$1 billion) this year in strengthening the network infrastructure, including long-term evolution. LTE, is a faster and more advanced mobile network technology than conventional third-generation technology that allows users to conduct functions such as video conferencing.
• Tencent Holdings Ltd. acquired a majority stake in Los Angeles online-game publisher Riot Games Inc. While terms weren’t disclosed, a person familiar with the matter said the companies were negotiating a price of more than US$350 million. The person declined to be identified because the terms are private according to Bloomberg.Riot Games was founded five years ago and raised US$8 million in 2009 from Tencent and venture firms Benchmark Capital and FirstMark Capital. That year, it introduced “League of Legends,” the company’s first game. While the downloadable game is free to play, users spend money on microtransactions, such as paying to strengthen their characters.Tencent is expanding outside of China, building on the 600 million-plus users of its QQ messaging service. The company acquired 10 percent of Russian investor Digital Sky Technologies last year, giving it indirect stakes in Facebook Inc. and Zynga Game Network Inc. Riot Games will keep its Los Angeles-area headquarters and sees to hire aggressively this year. The company also will develop new games and expand into other markets. The market for social and mobile games has attracted more suitors since late 2009, when Electronic Arts acquired Playfish Inc. for about US$400 million. Zynga is worth US$6 billion on secondary exchange SharesPost Inc.
• Tencent launched its group shopping platform, dayoo.com cited. QQ Group Shopping will have multiple services like instant messaging, social networking and online payment. The platform was introduced to least 10 group shopping and other service provider partners on a trial basis and will introduce new partners after the Chinese New Year holidays.
• Alibaba Group will be the Ministry of Commerce's (MOFCOM) third-party international trade e-commerce platform. MOFCOM has allocated 40 billion yuan (US$6.1 billion) for the development of the third-party platform.
• Group shopping site Lashou has secured third-round financing worth nearly US$500 million, which made the company worth US$2 billion. Lashou had weekly sales turnover of US$3 million, and annual revenue of at least US$150 million.
• Baidu's fourth-quarter net profit at least doubled and its revenue nearly doubled as China's top Internet search engine had results above expectations. Net profit for the three months ended Dec. 31 surged to 1.16 billion yuan (US$175.9 million). The net profit was higher than the average 1.06 billion yuan (US$162 million) forecast of six analysts. The robust results come as Baidu has taken away Google's share of the Chinese search market and has boosted its revenue per customer with a new keyword advertising system, Phoenix Nest. However the company's fast growth in 2010 means its financial results this year may face tougher year-earlier comparisons. Baidu projected first-quarter revenue will range from 2.38 billion yuan (US$362 million) to 2.45 billion yuan (US$374 million). Baidu will develop more social networking services to be more competitive given the commercial value of social products is meaningful, Baidu chief executive Robin Li said. The company will spin off Qiyi.com, an online video company, with over 100 million users.
• Sohu.com’s net income for the fourth quarter of 2010 reached US$57.4 million with profits of US$198.2 million. Total revenues were US$173.2 million, with brand advertising revenues contributing US$60.1 million, and bringing full year revenues to US$612.8 million. Sohu had revenue reached between US$163 million and US$168 million. The company's online games segment, under Changyou.com had revenues of US$91.7 million in the quarter. For the first quarter of 2011, Sohu sees to have revenues of between US$164.5 million and US$169.5 million.
• Nokia had a 34.6 percent share of the Chinese mobile handset market in 2010 followed by HTC with a 17.8 percent share. Samsung Electronics was third with a 10.7 percent share. Motorola and Sony Ericsson trailed Samsung, holding 9.4 percent and 8.1 percent market shares, respectively. LG Electronics had a 2.1 percent share of the mobile market in China.
• China Unicom said its profit for the financial year ended 31 December 2010 is expectedto drop by over 50 percent. Although revenue had grown rapidly last year, it faced high pressure due to the fast surge of depreciation and amortization, networks, operations and support expenses, as well as selling expenses, particularly the 3G handset subsidy, in relation to the initial operation stage of the company's 3G business. China Unicom will announce its financial results for 2010 in March.
• Huawei Technologies Co. estimates its 2010 revenue totaled US$28 billion. The unaudited figure is 28 percent higher than the US$21.8 billion in revenue Huawei reported for 2009. Huawei's contract sales for handsets and other devices totaled US$5.7 billion last year, Victor Xu, chief marketing officer for Huawei's device division, said last month.
• China Telecom added 2.5 million CDMA subscribers in December, a decline of 0.8 percent over the addition in November, and the monthly increase hit the lowest level in 2010. The operator's net increase of 3G subscribers was 8.22 million in 2010, which brought its total number of 3G users to 12.29 million. China Telecom's broadband users increased 0.79 million in December, bringing the total to 63.48 million. The operator lost 1.22 million fixed line telephone users in December, reducing the total number to 175.05 million.
Media, Entertainment and Gaming
· Changyou generated net income of US$47.8 million, bringing full year profits to US$174.9 million with total revenues for of US$327.1 million. Aggregate peak concurrent users (PCU) rose 5 percent quarter-on-quarter and 7 percent year-on-year to 1.03 million, as aggregate active paying accounts (NYSE:APA) surged 3 percent quarter-on-quarter and 13 percent year-on-year to 2.7 million. For the first quarter of 2011, Changyou expects revenues of US$92 million to US$95 million. The company acquired the remaining 50 percent of the equity in Shanghai Jing Mao Cultural Communications, giving it additional advertising resources.
• The China PC market grew by 4 percent year-on-year in the fourth quarter of 2010, according to IDC. This new data falls short of IDC's initial forecast by 8 percent, amid signs of slow-down in the market. A cooling Chinese economy, lack of drivers to sustain further notebook adoption, and rapid growth of media tablets were the top reasons that contributed to the relatively staid volumes this quarter. However, the fourth quarter result is not seen to alter the long-term outlook for sustained growth, as the market remains fairly unsaturated and is seen to see a strong recovery in the second half of this year. In the worldwide PC market, the top four leading companies have not changed position in the past year. The companies that have remained at the top are HP, Acer, Dell, and Lenovo.
• Cavium Networks, a provider of highly integrated semiconductor processors in the U.S., has signed an agreement to acquire China-based fabless semiconductor company Celestial Semiconductor. The net purchase price of the acquisition will be approximately US$55 million, to be paid in a combination of cash and stock. There is an earnout provision whereby the purchase price can surge by up to US$10 million contingent on achieving certain revenue milestones during the following twelve months. The acquisition is expected to close by the end of the first quarter of this year. Cavium Networks said this acquisition will be non-GAAP earnings neutral during the first half of this year and modestly accretive by the second half of this year. Celestial provides a family of ARM-based high-performance SoCs with HD quality video processing, multi-source video input and multi-format video playback.