Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

IRG Technology, Media and Telecommunications Weekly Market Review (Week of 3 - 11 Jul 2010)

Mobile/ Wireless
         Japanese mobile operators added 526,900 new subscribers in June to reach a total of 113.716 million mobile subscribers, according to figures from the Telecommunications Carrier Association. Softbank again led in subscriber additions in June as it added 229,500 new customers to bring its total to 22.573 million. NTT Docomo gained 164,600 new subscribers to reach a total of 56.514 million. KDDI ended the month with 32.091 million subscribers after adding 61,300 new customers. PHS provider Willcom lost 60,600 customers, which brings the company's total to 3.882 million. Willcom has filed for bankruptcy and has begun a rehabilitation process.
         Canon will have a near three-fold jump in its group operating profit for the January-June period, boosted by better-than-expected sales of digital single-lens reflex cameras and laser printers. The company’s operating profit for the first half will boost 180 percent at about 182 billion yen (US$2.07 billion). Full-year sales are seen up 15 percent due to boosting demand for entry-level digital SLR cameras and sales in China. Renewed spending on information technology by clients helped the office equipment division. Canon's gross profit margin spring back from its amount during financial crisis. Sales will boost to 17 percent, with operating profit predicted to surge 66 percent. Canon will be affected by weak euro lessening spending and accelerate sales of highly profitable products like in digital cameras.
         Fujitsu Ltd. will increase investment in cloud computing to 100 billion yen (US$1.1 billion) in fiscal 2010, as the business is expected to be at the center of future growth. The company will nurture about 5,000 cloud computing experts by the end of fiscal 2011, while setting up a data center in southern China by the end of the fiscal year through March 2012 to accelerate its cloud computing business in the country. Fujitsu has set a sales target for the cloud computing-related business of between 1.30 trillion yen (US$14.7 billion) and 1.50 trillion yen (US$16.9 billion) in fiscal 2015. President Yamamoto also showed eagerness to engage in mergers and acquisitions to enhance Fujitsu's businesses in areas such as software, saying that the company is aiming to increase ventures with various global partners.
         Sanyo Electric Co. announced that it is considering selling its semiconductor operations for as much as 30 billion yen (US$339 million). No further details were disclosed.
         The president of NTT DoCoMo Inc. is in negotiations with the gaming machine makers regarding their proposed portable game consoles linked to the 3G network, by installing the Japanese mobile carrier's 3G modules. Traditional game console makers are struggling to improve their products to be more network capable. Nintendo will launch a brand new hand-held device called the Nintendo 3DS, which will feature beefed-up wireless network capability. DoCoMo will boost its smartphone offerings by releasing about seven new models by the end of this fiscal year through March, including Samsung Electronics Co.'s Galaxy S smartphone. DoCoMo will launch a tablet-type mobile device.
         NTT Communications announced that its subsidiary NTT Communications (Thailand) Co., Ltd. has begun operating a branch office in Cambodia. Headed by the concurrent president of NTT Communications (Thailand), Tsuyoshi Kawashima, the Phnom Penh Branch will provide multinational companies in Cambodia with ICT solutions from NTT Com.
         Renesas Electronics Corp. will acquire Nokia’s wireless modem worth US$200 million. This will allow the transfer of the division's 1,100 workers in Finland, India and other countries, as well as wireless technology used in mobile phone handsets worldwide to the Japanese company. Renesas and Nokia had a joint research and development of next-generation modem technology.
         NEC will have its revenue from carrier network operations to boost by 34 percent from the current fiscal year. The business environment is changing in the company's favour, as the rapid expansion of mobile data traffic due partly to the growth of smartphones arises.
         Google Japan will launch its electronic bookstore Google Editions in Japan early next year. The service will offer acquisition of e-book titles for reading on devices such as PCs and smartphones, as well as a host of e-book readers. The company's existing Google Books service currently allows access free of charge to sections of at least 2 million titles from 30,000-plus publishers worldwide. Google Editions, however, will offer access to entire publications for a fee. Publishers will have control over setting e-book prices. At least half of sales will be distributed to publishers.
         South Korea will place 15 trillion won (US$12.5 billion) to become the world's dominant producer of rechargeable batteries in the next 10 years. The new "Battery 2020 Project" will pool resources from both the state and private sector to gain control of the rapidly expanding industrial sector. The global market for rechargeable lithium-ion batteries is expected to grow six-fold from US$12.3 billion this year to US$77.9 billion in the target year as demand for the convenient, eco-friendly power source rises in such areas as mobile information technology products, electricity powered vehicles and power cells used to store energy. South Korean, Japanese and Chinese companies controlled 95 percent of the global production with Japan's Sanyo holding onto 20 percent of the market followed by Samsung SDI Co. and LG Chem Ltd. controlling 19 percent of worldwide production each.
         China's Ministry of Industry and Information Technology renewed Google’s Internet license as Google submitted a revised application to meet regulations in the world’s biggest Internet market by users. The renewal was granted to Beijing Guxiang Information Technology Co. Ltd., the operator of Google's Chinese web service. China's official Xinhua news agency reported on the terms of the renewal, According to Xinhua news agency, in the application letter, Guxiang pledged to "abide by Chinese law," and "ensure the company provides no law-breaking content as stipulated in the 57th statement in China's regulations concerning telecommunications." The statement says that any organization or individual is prohibited from using the Internet to spread any content that attempts to subvert state power, undermine national security, infringe on national reputation and interests, or that incites ethnic hatred and secession, transmits pornography or violence. Guxiang also accepted that all content it provides is subject to supervision of government regulators.
         Huawei Technologies is selling equipment for the development of the wireless broadband network of Sprint Nextel. The deal will require at least an acceptance from the U.S. government. Huawei has sold equipment to a large U.S. telecommunications operator as it has made sales to smaller U.S. operators. Huawei's growth in the U.S. has been clogged as the U.S. government's scrutinizes the company.
         The Chinese government asked its Indian counterpart to have an open and transparent environment for its telecom companies despite accelerating ambiguous prohibitions on acquisitions of telecom gear by Indian operators from the Chinese vendors. The Chinese media released hundreds of entries to reveal the issues. Chen Deming and his office are now scrutinizing the problem. He received reports of 25 Chinese companies being blacklisted by Indian government for acquiring telecom equipment due to security related concerns. The Chinese government would approach New Delhi regarding the issue and will ask for clear policy which will not be China specific. He disagrees that China may respond by blocking imports from India. This issue would be solved through diplomatic channels.
Media, Entertainment and Gaming
·          China online game developer and operator The9 Ltd. announced that it has made a strategic minority equity investment in Aurora Feint Inc. Based in Burlingame, California, Aurora Feint develops mobile games and operates OpenFeint, a mobile social platform and application for smartphones. The9 Board Chairman and CEO Zhu Jun emphasizes that this will improve the set up of mobile game platforms. 233 million Internet users surf online through mobile phones in China, accounting for 60.8 percent of the total. The mobile gaming market might reach 2.5 billion yuan (US$369 million) this year. The9 believes that online game companies will miss the most important opportunity in the future ten years if they do not invest in the mobile Internet field now.
      Sales of electronic reading (e-reading) devices in China numbered 231,200 units in the second quarter of 2010, down 7.19 percent quarter-on-quarter. Hanwang Technology Co. Ltd. remains the market leader, selling 168,400 units, or 72.84 percent of total e-reading devices sold, in the first quarter. Teclast Electronics Co. Ltd. ranked second, accounting for 6.66 percent of the sales in the quarter. Iriver Ltd. was in 3rd place with 12,300 units sold, or 5.32 percent of sales. Iriver started selling e-reading devices in China in December 2009. Founder Technology Group Corp had 2.43 percent sales, as Tianjin Jinke Electronics Co. Ltd had 2.29 percent of sales. This showed the decline in sales to a wait-and-see attitude among consumers who are seeing more tablet computers introduced on the market. Apple is in negotiation with China Unicom regarding the introduction of its iPad tablet computer in China, while Beijing Huaqi Information Digital Technology Co. Ltd launched their tablet computers.
Alternative Energy
      ReneSola Ltd. will have shipments of 250-260MW and revenues of between US$245 million and US$255 million in the second quarter of 2010. The company is seen to garner gross profit margin of 28-30 percent in the quarter. This means a boosting revisions of previous guidance of 230-250MW of shipments and revenue ranging from US$230 million to US$250 million, at a gross profit margin of 21-23 percent.
      Yingli Green Energy Holding Co. Ltd. agreed with China Development Bank (CDB) for credit facilities up to 36 billion yuan (US$5.31 billion) for photovoltaic investments. The bank will grant the credit facilities to Yingli Group Co Ltd and its affiliates, including three Chinese units of Yingli Green Energy. CDB sees to grant the credit facilities to these units for their photovoltaic industry-related domestic and overseas investments.
      JA Solar Holdings will acquire 100 percent of the shares of Shanghai Jinglong Solar Technology from Ningjin Jinglong PV Investment. Shanghai Jinglong Solar Technology owns the land, building and facility currently being leased by JA Solar for its module production operation in Fengxian, Shanghai. JA Solar will own approximately 206,590sqm of land, 58,706sqm of buildings and related facilities. JA Solar will acquire Shanghai Jinglong Solar Technology. The acquisition will improve JA Solar’s expansion of its manufacturing operation to support customers' growing requirements.
      Datang Telecom Technology & Industry Holdings Co., Ltd. is seeking to buy additional 1.5 billion new shares in Semiconductor Manufacturing International Corporation (SMIC) to lift its holdings in the chipmaker to 19.1 percent from 15.2 percent. SMIC, whose biggest shareholder is state-owned Datang Telecom will sell up to 1.5 billion new shares to unknown institutional investors to fund around US$104 million. The issuance price range represents an 8.5 percent-11.9 percent discount.
Investments/ Ventures
         Goldman Sachs is in talks about the acquisition of a 12 percent stake in Taikang Life Insurance worth US$1.05 million from French-base AXA SA. Goldman Sachs and the other two companies will acquire a 15.6 percent stake in Taikang for US$1.1 million. Taikang will introduce an initial public offering in three years and become the third largest insurer within five years. Taikang had premium income of US$ 33.59 billion will widen its market quota to 10 percent this year.

Disclosure: Author holds no positions in the stocks mentioned