A week in tech, August 4-8

A round-up of all the latest tech news.

ò MoodyÆs Investors Service announced it is upgrading Softbank, as it pointed to the internet firmÆs acquisition of VodafoneÆs Japanese unit as a factor that should boost its competitiveness. In the announcement, the risk evaluator upgraded SoftbankÆs long-term debt rating and issuer rating to Ba2 from Ba3, with a stable outlook. Softbank completed a deal in April to buy Vodafone Japan for $15 billion. Softbank also owns Yahoo Japan. The company said it plans to rename the entity Softbank Mobile and remove the name of the British firm, which faced problems when it entered the Japanese market. Moody said the move will add diversification in the Japanese telecommunication market. Softbank said it will put more money into the Vodafone unit.

ò Sony announced that it will market in the US a first-of-a-kind wireless broadband device allowing users to exchange online voice and text messages, browse the internet and listen to music. The palm-size personal communicator, named mylo and aimed largely at university students, is capable of operating in Wi-Fi networks in public spaces or at home, the Japanese electronics giant said. The mylo - standing for "my life online" - will be sold in September for about $350 in the US market. The mylo can scan for available wireless networks and its HTML browser lets users connect to full web pages on the Internet as well as send e-mails. The gadget has a built-in speaker for listening to music stored in its one-gigabyte flash memory, which can also store digital pictures.

ò Softbank reported its fourth straight quarter of profit, with the company ascribing the growth on increased subscriptions from its broadband and fixed-line services and earnings as well from its Vodafone K.K. unit. The company announced a net income totaling Ñ1.4 billion ($12 million) in the three months ended June 30. Softbank also disclosed that its spending target is now doubled to about Ñ500 billion ($4.2 billion) for increased wireless network coverage aimed at its rivals NTT DoCoMo and KDDI Corp.

ò Matsushita Electric Industrial disclosed that it was looking to its JVC unit turning profitable this year. JVC is 52.4 percent owned by Matsushita, the worldÆs largest consumer electronics maker. A Matsushita official noted that JVCÆs loss of Ñ1.9 billion yen ($16.3 million) in the fiscal first quarter was smaller than what it had originally expected. Outside of the losses at JVC, Matsushita posted a 41.5 percent rise in its quarterly profit, which was brought about by demand for its plasma TVs and digital cameras.

ò Sanyo Electric announced its global TV alliance with TaiwanÆs Quanta in an agreement that will allow them to work together to acquire materials. Under the deal, Sanyo would spin off the development and purchasing operations of its TV business and establish a new company in October this year. The agreement would also see Quanta Computer getting a 19 percent stake in that company. The company to be formed in the alliance will be called Sanyo Visual Technology. It will cover development and purchasing of SanyoÆs TV business worldwide, including Japan, North America, Europe, and the mainland. The TV business includes old-style cathode ray tube TVs as well as newer and slimmer liquid-crystal display panel TVs. The two companies said they would continue to discuss setting up a joint venture for flat-panel TVs. Sanyo has been moving to turn around its business, partly by forming alliances with companies to lighten its production costs for mass-consumed products. Quanta is the worldÆs largest notebook computer design and manufacturing company. It also has a display maker, storage operations, and other units in its group.

ò Samsung Electronics, the world's third-biggest maker of mobile phones, said a new partnership with Sprint Nextel Corp will help boost its share of the $1 trillion U.S. telecommunications market. Samsung has about 17 percent market share in the U.S., behind Motorola and Nokia. Samsung, Motorola and computer chipmaker Intel are helping Sprint, the No. 3 U.S. mobile-phone services provider, build a so-called WiMax network that can beam internet signals as far as 30 miles to provide cheaper high-speed wireless service. Samsung is the only vendor of mobile phones, personal digital assistant devices and personal computer cards able to operate on a WiMax network that is being run in Seoul by KT Corp, formerly Korea Telecom Corp. Sprint is the first major US phone company to invest in WiMax. The company, which lags behind Cingular Wireless LLC and Verizon Wireless, plans a test system by the fourth quarter of next year and wants to offer the service to 100 million people in 2008. Motorola, the second-largest maker of cell phones, and Samsung will make handsets for Sprint that are capable of accessing the new network and Sprint's existing system. Samsung and Motorola plan to make all their products including TV set-top boxes, video and still cameras compatible with WiMax.

ò South Koreans spent more time on the Internet in the first half than a year earlier, using the computer network mainly to obtain information, send emails and engage in other online activities. According to the report by the Ministry of Information and Communication, South Koreans spent an average 13.3 hours a week online during the first six months of this year, up 0.4 hours from a year ago. The report showed most people logged onto the internet to find information related to education and career. Emailing, online chatting, shopping and other leisure activities including gaming were cited as the main reasons for using the network. The internet use rate for those under the age of 30 reached 73.6 percent. As of the end of June, a total of 33.6 million people were using the internet, meaning that the nation's internet penetration rate stood at 73.5 percent, up 1.6 percent from a year earlier. South Korea, one of the most advanced Internet nations, leads the world in the percentage of people who have broadband internet connections. About 12 million people out of its population of 48 million have high-speed internet access.

ò Interpark, one of the country's largest online shopping malls, said its net income for the second quarter was W1.4 billion ($1.5 million), down 75 percent from the previous quarter, hit partly by low demand during the World Cup soccer games in June. Operating profit plunged 70 percent quarter-on-quarter to W1 billion ($1.0 million). The earnings of the online shopping mall yesterday attracted keen attention as Interpark holds a 33.7 percent stake in Gmarket, a Korean venture which listed on the Nasdaq stock market in late June. Gmarket started as an in-house venture project at Interpark six years ago and emerged as one of Korea's two biggest open e-marketplaces, where small merchants sell their products at competitive prices. Analysts said Interpark's earnings would likely worsen further in the third and fourth quarters because the government has moved to abolish gift certificates, which bolstered the company's revenue in recent months. The company's gift certificate business posted W8 billion in the second quarter.

ò Hanarotelecom Inc. reported a net loss of W16.2 billion ($17 million), compared with a loss of W33.1 billion ($34.2 million) a year ago. The quarterly loss was narrowed after Hanarotelecom, controlled by US investors American International Group and Newbridge Capital, put its focus on cutting costs. South Korea's broadband internet market, with one of the world's highest penetration rates, is slowing with market saturation. Broadband operators such as Hanarotelecom and market leader KT are struggling with fierce competition as cable television companies are increasingly eating up the high-speed Internet market with cheaper services. To find a new revenue stream, Hanarotelecom launched an internet-based television broadcasting service called Hana TV, but analysts are sceptical about whether the business will be profitable. At the operating level, Hanarotelecom posted a profit of W7.5 billion ($7.7 million), compared with a loss of W3.4 billion ($3.5 million) a year earlier.

ò The country's second-largest fixed-line carrier Dacom said that it has decided to change its name to LG Dacom, in a bid to enhance its brand recognition. The company's board of directors yesterday decided on the name change and will wait for final approval from shareholders, the company said in a regulatory filing. Dacom's second-quarter earnings more than tripled from a year earlier. It posted W52.4 billion ($54.2 million) in net profits.


ò Google revealed its plans to open a center in Shanghai in a bid to aid its expansion of its database and create services aimed at countering the presence of Baidu.com. The company said the development facility, which will be GoogleÆs second in China, may be operational this year. The move is part of GoogleÆs attempt to get the market share from Baidu by hiring more engineers to increase the size of its Chinese-language search database and to introduce more local services. Baidu remains the most used search site in China. According to iResearch, the Internet search market in China is seen as creating sales worth Rmb5.6 billion ($702 million) in 2007, up from Rmb3.6 billion ($451.2 million) this year.

ò Alibaba.com Corp and Yahoo said they are discussing with record companies on how to offer music legally over the Internet. Alibaba operates Yahoo China, the nation's second-largest search engine which provides links on its web site to illegally copied music on non-affiliated sites. Industry observers see the talks as a means to help Alibaba avoid a lawsuit by the International Federation for the Phonographic Industry on infringement charges. The federation said it plans to sue the companies in a few weeks. Alibaba's sales doubled to $100 million in the first half from a year ago, matching its revenue for the all of last year.

ò Tom Online reported a 15 percent increase in its profit to $11.7 million but predicted revenue might go down by 35 percent in the third quarter because of new pricing rules imposed by China Mobile. Tom Online estimated third-quarter revenue to be $32.5 million to $34.5 million, down by 31 to 35 percent from the same quarter last year. Its second-quarter revenue was $50.1 million, up 17.1 percent from a year ago and 3.1 percent from the first quarter. Earlier in June, China Mobile, the mainland's largest mobile-phone carrier, said that wireless value-added service providers including Tom Online would have to confirm new subscriptions twice before they could start charging their services. This is to reduce customer complaints. The company only allowed content providers to charge handset users fixed monthly packages instead of charging on the level of usage. The company said wireless internet business was Tom Online's single most significant income driver, accounting for 91 percent of its total revenue.

ò Analysts are saying the highly popular Xiaolingtong, a limited-range mainland wireless service may disappear within five years of the arrival of 3G mobile-phone services. Contributing to its demise is the factor of 2G operations slashing prices further to compete for customers. The device based on personal handyphone system technology, had 92 million users as of the end of June and earns fixed-line operators China Telecom Corp and China Network Communications Group about Rmb40 ($5) per month revenue per customer (ARPU). The service has no roaming capability, with the government classifying it as an extension of the fixed-line service. As inexpensive 2G units became available, Xiaolingtong's handset production went down by 30 percent to 6 million units for the first half, from 8.7 million in 2005. With half of Xiaolingtong users also owning a China Mobile or China Unicom number at the same time, analysts are looking to them as the first target for China Telecom and China Netcom to link them up to 3G.

ò Advanced Semiconductor Manufacturing Corp (ASMC), a mainland chipmaker partially owned by Royal Phillips Electronics, posted a net profit of Rmb22.1 million yuan ($2.7 million) in the first half, with the company ascribed the growth to the nearly 50 percent climb in its as sales of eight-inch wafers.The firm makes five-inch, six-inch and eight-inch wafers at two fabrication plants in Shanghai. The company said the utilisation rate at its two fabrication plants went up by 69 percent in the second quarter, from 62 percent in the first three months of this year. The company, which gets more than half of its sales from North America, disclosed that it will pay no interim dividend.


ò Chi Mei Optoelectronics reported a net loss of NT$944 million ($29 million) in the second quarter to June, with the company ascribing the decline to a sharp fall in flat panel prices. The figures are the reversal of profits of NT$5.4 billion ($165.4 million) the company posted in the first quarter to March and compared with the NT$1.7 billion loss ($52 million) posted in the same period last year. The company said the blended average selling price for different sizes of thin-film-transistor liquid crystal display panels went down by 24 percent sequentially to $161 apiece in the second quarter. In the April to June period, the company shipped just more than seven million LCD panels, up 1.4 per cent from the first quarter. The company said it is retaining its original target of shipping 10 million panels meant for LCD TVs this year, allowing it to get more than 20 percent of global market share.

ò HannStar Board Corp announced its plan to spin off its printed circuit board unit in a bid to raise $90 million. With this move, HannStar becomes part of a growing number of Taiwanese firms tapping Hong Kong's equity market. A market source said that HannStar Board International, the world's largest printed circuit board supplier for laptop computers, planned to list in Hong Kong by the end of the year. Taiwan Securities and Polaris Securities will handle the share sale, with the IPO as early as December. According to HannStar Board Corp's latest announcement, its mainland operation posted a profit of HK$175.5 million ($22.5 million) last year, up 95.5 percent from 2004.

Hong Kong

+ CSL New World Mobility (CSLNW), a Hong Kong unit of Australia's dominant telecommunications group Telstra, reported a 5.4 percent decline in its first-half profit of HK$686 million ($88.2 million) from HK$725 million ($93.2 million) a year earlier. The company became Hong Kong's largest mobile operator by subscribers after a merger with New World Mobile's operations in March. It doubled its number of subscribers by partnering with New World Development's New World Mobile, in a bid to better compete in the highly competitive Hong Kong market. The combined company now commands 2.6 million customers, or about a 34 percent market share even as costs are still high with regard to marketing related to its 3G mobile network. CSL said its total expenses climbed 15.7 percent to HK$4.1 billion ($527.1 million).

Media, Entertainment and Gaming
+ The Hong Kong Economic Journal, considered to be Hong Kong's oldest and most respected economic daily disclosed the selling of about 50 percent of its shares to a trust company owned by Richard Li Tzar-kai, the outgoing chairman of PCCW. The deal is placed at HK$250 million ($32.1 million) and is seen as the first step in additional acquisitions of a bigger stake in the daily by Clermont Media, an offshore trust. An official of the daily said a new company would be set up to hold the paper. The official called the sale a good deal for the paper. The Hong Kong Economic Journal is noted for its highly independent stand on many issues.


ò Creative Technology reported an annual net loss of $118.2 million compared with a $588,000 profit in the previous year, amid market forecasts for a full-year loss of $128.7 million to $140 million. Despite the results, the Singapore-listed firm declared it is looking to the company returning to profitability by the end of this year amid ongoing efforts to trim expenses and hopes of a boost from the launch of new products. The company said sales in the year to June were $1.1 billion, down from$1.2 billion in the previous year. For the fourth quarter to June, Creative narrowed its losses to $12.7 million. Creative owes its popularity to its SoundBlaster card that allowed personal computers to be used as home entertainment units but it has struggled recently after venturing into consumer electronics. The company has targeted the MP3 player market as a key to growth but has found it difficult to match Apple's iconic iPod, which dominates sales in the crucial US market.

ò Philippine Long Distance Telephone Co (PLDT) reported a 7 percent decline in its first-half net profits of Ps15.3 billion ($298.8 million). Despite the decline, analysts noted the remarkably strong growth in PLDTÆs mobile subscriber base. The company ascribed the decline to losses on depreciation charges and foreign exchange. PLDT reported a total mobile phone subscriber base of 22.5 million.

A week in tech is brought to you by FinanceAsia, and IRG, Asia's boutique investment bank to the telecoms, media and tech sectors. More can be found at:

www.irg.bizIRG logo

¬ Haymarket Media Limited. All rights reserved.