• Handsets running Google’s Android software captured 57 percent of Japan’s smartphone market last fiscal year, cutting the share of Apple’s iPhone, MM Research Institute Ltd. said. Shipments of Android phones increased to 4.91 million units in the year ended March 31, compares with sales of 250,000 units, or 11 percent of the market, a year earlier when devices running Google’s software started to be widely available in Japan. Apple shipped 3.23 million iPhones in Japan in the last fiscal year, accounting for 38 percent of the nation’s smartphone market. Sharp which introduced its first Android model in June 2010, was second with a 24 percent share of shipments, followed by Sony Ericsson Mobile Communications AB’s Xperia with 9.8 percent.
• NTT DoCoMo announced an agreement with Twitter to develop mobile apps and services incorporating features of the social network site. DoCoMo said it will first incorporate real-time tweets and other content into the search results on its i-mode portal (for feature phones) and DoCoMo market (for smartphones) either late this year or early into the next.
• Japan's NTT may pay US$263 million to maintain its 20% stake in PLDT if PLDT close the acquisition of a controlling stake in Digitel in a transaction that could involve a share-swap component. DoCoMo first acquired its 7% holding in March 2006.
• NTT announced that it would purchase 70 percent of Australian technology services firm Frontline Systems. Frontline, which was established in 1992/1993 and provides IT infrastructure, consulting and managed services — with key relationships with HP, IBM and Oracle’s Sun Microsystems. The acquisition is NTT’s second major step into the Australian market, following the acquisition of tier two IT services player Dimension Data in mid-2010. Frontline is forecasting sales revenue of US$277 million this financial year to June. Frontline company has datacentres, warehousing and sales operations in Brisbane, Sydney, Canberra, Melbourne, Adelaide and Singapore.
• Japan's third-largest mobile carrier Softbank’s net profit for the three months ended March increased to 47.41 billion yen (US$586.9 million), and its full-year operating profit hit a record high for the sixth-straight fiscal year, as demand for iPhone continued to underpin its earnings. Smartphones represent one of the few growth areas in Japan's otherwise saturated mobile phone market. Softbank is the only local carrier of the iPhone, helping it to win new customers and generate more revenue from data transmission. The company's operating profit for the quarter increased 48 percent to 147 billion yen (US$1.8 billion), as revenue increased 5 percent to 754.74 billion yen (US$9.3 billion). Softbank's full fiscal year net profit doubled to 189.71 billion yen (US$2.3 billion). Operating profit increased 35 percent to a record 629.16 billion yen (US$7.8 billion), as its revenue increased 8.7 percent to 3.005 trillion yen (US$37.2 billion).
• Softbank has invested US$62.5 million into online shopping destination operator Gilt Groupe. Softbank will acquire a 50 percent stake in Gilt Groupe KK to accelerate Gilt Groupe KK's expansion in Japan.
• KT Corp.’s first-quarter earnings soared 84.7 percent from one year ago to 555.2 billion won (US$513.6 million), helped by increased smartphone sales and a one-off gain from a stake sale. Sales increased 6.1 percent from one year ago to 5.3 trillion won (US$4.9 billion) in the quarter and operating profit increased 61.7 percent to 726.3 billion won (US$668 million). KT said the number of its smartphone subscribers reached 3.83 million as of the end of March, accounting for 23 percent of its subscriber pool. KT, also the second-largest mobile carrier after SK Telecom Co., was the sole distributor of iPhone until SK Telecom began offering the hit smartphone in March. KT sold at least 2 million iPhones as of January. Its wireless data sales increased 39.5 percent from one year ago with smartphone subscribers using mobile phones to surf the Web and use mobile applications. KT will introduce at least 25 smartphone models this year, including the Galaxy S2 smartphone from Samsung Electronics Co. It started sales of the iPad 2 last month.
• ChinaCast Education booked a net income of US$5.7 million in the first quarter of 2011, up 24 percent on an annual basis. ChinaCast saw total revenue for the quarter increased 43 percent year-on-year to US$22.8 million, of which the company's traditional university-based courses generated US$15.4 million, a gain of 69 percent year-on-year, as student enrollments increased to 32,600 from 20,400 in the year-ago period. The company's electronic learning programs revenue increased 7 percent year-on-year to US$7.3 million as the number of post-secondary enrollments increased to 144,000 from 141,000 in the first quarter of 2010. Total net revenue will be between US$94 million to US$96 million, representing a year-on-year gain of 21-23 percent.
• Sina Corp.'s first-quarter net profit declined a greater-than-expected 38 percent to US$15 million as the company increased investment in its microblog service, and it pledged to further speed investment in the service as its key growth driver. The result was below the average net profit forecast of US$17.7 million. Sina is betting that heavy investment in its popular microblog service, Sina Weibo, will pay off in the longer term by recharging its growth in online advertising and bringing in revenue from new areas like e-commerce and online games. Revenue increased 18 percent to US$100.2 million. Advertising revenue increased 33 percent to US$72.3 million, as non-advertising revenue declined 9 percent to US$27.9 million. Gross margin declined to 53.2 percent.
• Tencent Holdings Ltd. delivered a better-than-expected 61 percent increase in first-quarter net profit to 2.87 billion yuan (US$442 million) on the back of an acquisition and higher revenue from online games. Revenue increased 50 percent to 6.34 billion yuan (US$975 million). Tencent's revenue from Internet value-added services jumped 55 percent to 5.25 billion yuan (US$808 million) due to growth in its online games and online community businesses. As of March 31, it had 674.3 million active instant-messaging user accounts, up from 647.6 million at the end of 2010. Tencent is looking to expand its revenue from areas outside its core businesses of online games, messaging services and social networking. Tencent expects revenue and net profit growth to slow this year.
• Alibaba Group Holding Ltd. spun off its Alipay online-payment business to a different company without the knowledge or consent of its board or shareholders, Yahoo! Inc. said. Yahoo and Softbank Corp., owners of stakes in Alibaba Group, didn’t learn until March 31 of the transfer, which happened in August, Yahoo said. Alibaba shifted ownership of Alipay to a company mostly owned by Jack Ma, chief executive officer of Alibaba Group, to comply with Chinese restrictions on foreign ownership of payment services, Yahoo said. The transfer raised concern that Alibaba Group will be worth less without the payment business, weighing on Yahoo shares. It also may worsen relations between Yahoo and Alibaba, already strained by disagreements over censorship rules in China. Chairman Jack Ma has counteracted that its move to transfer ownership of Alipay to a separate entity is legal and 100 percent transparent. The board and shareholders including Yahoo and Softbank Corp. are fully aware of the ownership transfer of Alipay. Ma said he is less keen on buying back Yahoo's stake in Alibaba Group after the recent dispute with the U.S. internet giant.
• Alibaba.com Ltd.’s first-quarter net profit increased a higher-than-expected 37 percent to 452.5 million yuan (US$69.6 million) from a year earlier as members paid for more extra services on its websites, but it said slower revenue growth is likely in coming quarters. The result was above the average 425.4 million yuan (US$65.4 million) forecast of six analysts polled earlier by Dow Jones Newswires. Alibaba.com has shifted its focus from adding users to increasing revenue per user, partly by offering value-added services such as extra advertising options. The focus on gaining more value from existing members could slow its revenue growth. Revenue increased 25.5 percent to 1.53 billion yuan (US$235 million), but was below the average 1.58 billion yuan (US$243 million) forecast in the poll.
• Bank of Communications has signed an agreement with Alibaba Group to open an online store on Taobao.com as well as to launch express payment service with the e-commerce giant's online payment service AliPay, Reuters China cited. The bank also will offer loans online via Alibaba's business-to-business platform Alibaba.com.
• China’s biggest Internet company by revenue, Tencent Holdings Ltd, said first-quarter profit jumped 61 percent, beating analysts’ estimates, after offering new online games to boost sales. Net income climbed to 2.87 billion yuan (US$442 million) from 1.78 billion yuan (US$274 million) a year earlier with sales rose 50 percent to 6.34 billion yuan (US$976 million). Profit was boosted by a one-time gain of 459 million yuan (US$70.7 million) arising from the purchase of control of U.S. online video company Riot Games Inc. in February, said John Lo, Tencent’s deputy chief financial officer. Tencent paid US$231.5 million in cash, in addition to some stock options, for 70 percent of Riot Games, increasing its stake to 92 percent, according to the earnings statement. President Martin Lau said the company will invest heavily in its microblogging service, and expand its “Pengyou” social-networking site on the conference call today. Tencent has about 160 million users for microblogging and 101 million for Pengyou. The company increased its share of China’s online games market to 29.1 percent in 2010, from 21.1 percent a year earlier, according to research company iResearch. Second-ranked NetEase.com boosted its market share to 15.3 percent from 12.5 percent, the Shanghai-based researcher said. Tencent will increase spending this year on services including social media, Internet search and e-commerce, Ma said in March. The company, the leading provider of instant messaging service in China, will also step up efforts to expand overseas, according to Jack Ma. There were 674.3 million active user accounts for Tencent’s QQ instant-messaging service at the end of March, compared with 647.6 million three months earlier. Sales of Internet value-added services, including online games and QQ-related subscription fees, rose to 5.25 billion yuan (US808 million) from 3.39 billion yuan (US$522 million). Online advertising sales increased to 281 million yuan (US$43.2 million) from 204.3 million yuan (US$31.4 million). Tencent’s Internet value-added services business will see “weaker seasonality” this quarter, as online game demand is affected by school exams.
• Tencent has acquired a 4.6 percent stake in movie and TV entertainment company Huayi Brothers Mediain for approximately 450 million yuan (US$69.2 million). Huayi directors including Jack Ma and Yu Feng sold existing shares to Tencent, as part of the transfer agreement.
• Youku.com had a net loss of 46.92 million yuan (US$7.2 million) in the first quarter of 2011. Net revenues reached 127.99 million yuan (US$19.7 million), having exceeded the high-end of company guidance by 22 percent. Of the total, brand advertising revenues amounted to 119.8 million yuan (US$18.4 million) up 165 percent year-on-year. For the second quarter of 2011, Youku forecast year-on-year growth in net revenues of 125-135 percent. According to the company's F-1 form, Youku made net revenue of 71.20 million yuan (US$10.9 million) in the second quarter of 2010.
• The sales volume of cell phones in China reached 66.74 million units in the first quarter of this year, up 4.7 percent from the fourth quarter of 2010, according to Analysys International. Notably, sales of 3G handsets hit 19.07 million in the first quarter, up 26.8 percent year on year. Analysts hold that the steady growth of cell phone sales is mainly a result of the stimulus provided by the Spring Festival and the active promotion of tailored products by telecom operators. Meanwhile, the market share of smart phones continued to increase, rising 1.7 percentage points from the fourth quarter of 2010. Analysts predict China's handset sales will see a new period of growth in the second quarter as more new handset models enter the market.
• Datang Telecom Technology will acquire preference shares in Semiconductor Manufacturing International (NYSE:SMI) for US$70 million. Datang, which is already a substantial shareholder in the company, will acquire 85 million convertible preference shares, US$58.3 million in total, and 17 million share warrants for US$11.7 million, news agency Xinhua reports. SMI will use the proceeds to cover capital expenditure and repay debts.
Media, Entertainment and Gaming
· Shanda Games has licensed its in-house developed 2D MMORPG fantasy novel adaptation Legend of Immortal to SoftWorld International subsidiary Game Flier International. The game was licensed to Vietnamese game operator VNG Corporation in mid-March.
• AirMedia had a net loss of US$3.9 million in the first quarter of 2010, improving on the company's net loss in the year-ago period of US$6.5 million but following the company's fourth quarter net profit of US$5.1 million. AirMedia had total revenue growth of 25.8 percent year-on-year in the quarter to US$61.4 million.