a-week-in-tech-december-511

A week in tech, December 5-11

A roundup of the latest tech news.
Japan

Mobile/Wireless
ò NTT DoCoMo Inc. announced that it has entered into an agreement with KT Freetel Co., South Korea's second-largest mobile-phone operator, to jointly invest $200 million in Malaysian wireless carrier U Mobile Sdn. Under the partnership, DoCoMo and KT Freetel plan to each own 16.5% of U Mobile. The carriers will help U Mobile in its 3G mobile-phone business and promote roaming services using the Malaysian operator's infrastructure. Industry observers see the move as a bid by KT Freetel and DoCoMo to find new sources of income overseas as more than 75% of people already own handsets in their domestic markets. DoCoMo owns a 10.5% stake in Seoul-based KT Freetel. U Mobile is a unit of MiTV Corp. In 2006, the company secured a license to offer 3G services in Malaysia.

Software
ò Verdasys Inc., a global data security solutions provider and Japan based Rikei Corporation announced that they have entered into a strategic exclusive master distributor agreement. The agreement is expected to boost the availability of Verdasys' flagship product Digital Guardian in Japan and in other Asia-Pacific countries including Korea, Thailand, China, India, Singapore, Australia, Malaysia, Vietnam and the Philippines. This strategic partnership is seen as enabling Rikei to penetrate the rapidly growing Japanese data security market with Verdasys products, certified training and support. Rikei counts among its customers Japan Defense Agency, KDDI, NEC, NTT-ME, and Sanyo Electric. It has seven branches in Japan, as well as offices in the US, Hong Kong, Singapore, and China.

ò Fujitsu Ltd and the Institute for Information Industry of Taiwan announced their decision to set up a venture to provide WiMAX software to enable high-speed wireless networks. The two companies said they will set up the venture in March 2008 with a capital of $5 million. Under the arrangement, the two companies would supply the software to Taiwanese vendors and other manufacturers aiming to lower development costs. The software is designed to link applications on WiMAX devices and base stations.

ò Oki Electric Industry Company Limited and Fujitsu Limited announced that they have entered into an alliance to develop next-generation ATM (Automated Teller Machine) software. The two companies said they have already completed the development of a prototype of the software using a web-based architecture. The product will be released in Japan beginning April 2008, and the companies plan to sign up 200 customers over the initial three-year period. A key feature of the next-generation ATM software is its fee structure, which charges per transaction in order to reduce financial institutions' initial software development costs as well as streamline asset management operations. The software is designed also to be managed on a central server, thus enabling financial institutions to easily change and add software.

Telecommunications
ò According to industry sources, KDDI was able to generate some 80 billion yen ($716.3 million) in its first bond sale in two years, with the company selling 20 billion yen ($179 million) of 1.5% seven-year bonds. Daiwa SMBC and Mizuho Securities handled the sale. Earlier in May, Standard & PoorÆs raised KDDI credit by one level to A, the sixth-highest investment grade. KDDI said it looks to spending 500 billion yen ($4.4 billion) in capital investments next fiscal year.Korea

Internet
ò LG Powercom announced that, for the first time in its eight-year history, its sales have gone beyond 1 trillion won ($1.1 billion) due to growing demand for broadband Internet services. With an 11% market share, Powercom is the No.3 largest broadband Internet provider in the country after KT and Hanaro Telecom. Industry observers see the case of LG Powercom as special because in the saturated South KoreaÆs broadband Internet market, its net subscriber went up to 36,455 in October. In that period, KT, the largest player, lost 2,058 and Hanaro, the second largest, added only 1,162. LG Powercom said that part of its plan is to list its shares on the market in 2008 and merge with its parent company LG Dacom, a telephone and network service provider, as early as next year. According to analysts, the merger is seen as the best move in order for LG Powercomm to survive in the broadband Internet market. In separate developments, KT is moving to integrate with KTF and Hanaro Telecom with SK Telecom. In 2006, LG Powercom reported an operating profit of 38.4 billion won ($41.7 million) on sales of 812.7 billion won ($884.4 million) last year.

ò According to the Asset Management Association of South Korea, a growing number of investors are buying funds online. The report said funds sold online are approaching the 300 billion won ($326.4 million) mark at the end of November. The association also said that from 4 funds in February 2006, there are at present about 97 funds now available on the Internet.

Mobile/Wireless
ò According to industry estimates, average selling prices (ASPs) of Samsung phones went down to $153 in the third quarter from $172 a year earlier. The report also indicated that the selling prices of LG Electronics dropped nearly 10% to $108 over the same period. ASPs is a key indicator measuring profitability. The report attributed the decline in the prices to rising oil prices, among other factors. Industry observers note that few phone companies have been willing to go into the ultra low-end market because profits are thin. Samsung sold a record number of cell phones in the third quarter. More recently, the company completed its second plant in India while considering producing low-priced phones in Vietnam to narrow the gap with Nokia. Observers also state that LG Electronics is looking to getting about 40 trillion won ($43.5 billion) in total sales on a consolidated basis, with the company ascribing the figure to strong sales from handsets and information technology-related products even as it is said to be unsure about the industry outlook in 2008.

ò According to InterDigital Inc., a digital wireless technology company, a US District Court has confirmed a 2006 arbitration award asking Samsung Electronics Co. to pay the company $134 million in royalties, plus interest, in a licensing case. The company said Samsung will get a prepayment credit of about $6 million for sales of its second-generation wireless technologies through 2005. According to Interdigital, the award is for royalties from a patent licensing agreement between the companies during the period covering 2002 and 2006.

ò According to media sources, SK Telecom is considering selling its mobile phone manufacturing business in China and is now in talks with Chinese mobile phone manufacturers about these plans. In 2004, SK Telecom set up a joint venture company with Xinjiang Tiandi Group to manufacture SK brand CDMA mobile phones. The Chinese media sources quoted that SKÆs mobile phone business in the country has experienced poor operations. There is no information about the identity of company SK is in negotiation with at present.

Hardware
ò Haier said it looks to increasing its stake in the South Korean market. ChinaÆs leading home appliances manufacturer stated that it would focus more on LCD TVs and air-conditioners for commercial use. Haier said it is positive that it can double its sales to about 100 billion won ($108.8 million) in 2008 from about 45 billion won ($49 million) in 2007.

Telecommunications
ò KTF, LG Telecom, LG Dacom and LG Powercom issued their protest against SK TelecomÆs acquisition of Hanaro Telecom, indicating the lack of measures to control the companyÆs influence in the market. The companies, however, did not state what specific measures should be followed to satisfy their demands. SK Telecom is the leading mobile operator in Korea with a 50.5% share. Hanaro Telecom is the second largest fixed-line telephone and broadband Internet service provider after KT. SK Telecom signed a conditional contract to acquire a controlling share of Hanaro Telecom last week, which will be completed with the government's approval. Under the countryÆs telecommunications law, the government has the right to stop mergers and acquisitions when a deal is thought to be damaging to the national interest, or impinging on fair competition. It can also suspend a telecom firm's sales and marketing activities if it is found to be violating fair trade rules or is suspected of monopolising the industry. Earlier, SK Telecom signed a contract to buy 9.1 million shares of Hanaro Telecom at almost 2 trillion won ($2.1 billion) from a consortium led by two financial investors, American International Group and Newbridge Capital. China

Internet
ò Alibaba announced the launching of Online Warranty Loan, an online loan service in China, in cooperation with China Construction Bank. The company said six firms have reportedly received a total of 3.1 million yuan ($419,000) in low-interest loans, which do not require mortgage. Clients must have a membership in Alibaba's Chengxintong or Chinese Suppliers. According to the two companies, the service is now available to firms that have been registered for over 18 months at the Department of Industry and Commerce in the three trial cities of Hangzhou, Shaoxing and Jiaxing.

ò Sohu announced that it is raising its guidance for the fourth quarter of 2007 for total revenue, which is now expected to be between $55.5 million and $57.5 million. This marks an increase of $2 million over previous guidance. Sohu said the guidance for advertising revenue will remain unchanged from previously reported estimates of $31 million to $32 million with non-advertising revenue placed between $24.5 million and $25.5 million, an increase of $2 million over previous guidance. The Chinese Internet portal looks to online game as the main source of its future profits.

Media, Entertainment and Gaming
ò CDC Games, a pioneer of the ôfree-to-play, pay for merchandiseö model for online games in China, announced that its CDC Games International (CGI) business unit plans to launch Lunia Online, an MMORPG. The business unit of CDC Corporation said the game is based on the popular manga style comic art form, a form that is seen as widely popular worldwide. The game will be commercially available in the US during the first quarter of 2008. Lunia Online was developed by Korea-based ALLM Co., Ltd. Unlike many other MMORPGs on the market, Lunia Online is played like an action arcade game, as it allows players to move around using arrow keys rather than a mouse.

ò Linktone, a wireless value-added service firm announced that it has entered into a definitive agreement with Tianjin Satellite Television (TJSTV) through one of its wholly-owned media subsidiaries Lang Yi. Under the agreement, Linktone will serve as the exclusive, long-term partner for all non-4A Category I advertising on TJSTV, a popular satellite TV channel in China which reaches more than 50 million households. TJSTV has more than 170 million urban viewers in 31 provinces throughout China with the firm advertising revenue hitting 100 million yuan ($13.5 million) in 2007.

Hardware
ò According to its spokesperson, the TCL Group intends to keep the computer business even though it has announced that it will sell 82% of its computer company's stakes to an unnamed Hong Kong registered company. The spokesperson indicated that TCL has introduced strategic investment for the computer business, with the selling of the stake as a move to bring solution to the companyÆs debt problems. TCL also disclosed that it has entered into an agreement with the buyer that would allow it to be given the priority in acquiring back the stake in the future. TCL has not revealed any information about the buyer of the stake.

ò According to industry sources, Suning is acquiring its rival Dazhong in a deal valued at 3 billion yuan ($405.2 million). The report said that the Chinese electronics retailer has completed the audits related to Dazhong's profit-making capabilities. Under the agreement, Suning will permit Dazhong to run on its own operations and retain its own logo. Dazhong currently owns 63 stores in Beijing, which account for about 50% of BeijingÆs electronics retail market. The sources said, however, that no formal agreement has been made yet between the two companies.

Ventures/Investments
ò ZTE revealed its plans to join the energy sector through a new joint venture company with Zhongxing Weixiantong, ZTE Development, ZTE International and the president of ZTE Hou Weigui. The company said the group will invest a total of 1.2 billion yuan ($162 million) in the company, which is expected to focus on the development, investment, and production in the energy field. Industry sources said ZTE has spent some 300 million yuan ($40.5 million) on the joint venture. ZTE said it looks to the venture as boosting its external investment and increase the return of its investment. For the third quarter of 2006, ZTE posted a net profit of 143 million yuan ($19.3 million).Taiwan

Ventures/Investments
ò According to Taiwan's National Communication Commission (NCC), it has approved an application by Com2B, a provider of e-commerce solutions, to invest NT$60 million ($1.8 million) in Global Mobile, a licensed WiMAX operator. The announcement stated that the equity investment from Com2B will account for a 5% stake of Global Mobile's initial paid-in capital of NT$1.2 billion ($37 million). Outside of this present investment, Global Mobile said it has attracted investments from companies that include Era Digital Media, Videoland and Soft-World International. Media sources indicate, however, that Global Mobile might find it difficult to raise the minimum capital requirement set by the NCC so that it can initiate WiMAX service, with Global Mobile having raised only about 10% of the capital needed for its initial capital formation plan.

Hardware
ò According to industry sources, Asustek Computer is reportedly planning to move its production lines to Vietnam. The move has been attributed to the Vietnam government promising to provide several benefits and tax reductions, which encouraged Asustek to relocate Pegatron Technology to Vietnam. The firm is one of the planned subsidiaries that will result from Asustek's spin-off in January 2008. In Vietnam, Pegatron is expected to focus on the production of PC related products and components. Industry observers note that the move may create a trend that will see Taiwan-based IT companies to transfer their production lines and at the same time reduce their dependence on China.

ò Foxconn (Hon Hai Precision Industry) affiliated LED maker Foxsemicon Integrated Technology (FITI) recently announced its entrance in the lighting markets in both South Korea and Italy. FITI said it has secured a strategic alliance with South Korea-based Charm & Ci with the terms of the deal spanning from December this year until April 2010. FITI said it is also expanding its presence in markets in Europe, with the Taiwan-based LED entering into an agreement with local distributors to cooperate in pushing LED lighting products in Italy.

ò Digital Decade, a Pou Chen Group subsidiary in Taiwan, announced its decision to merge with Techview International Technology, an LCD monitor joint venture between Quanta Computer and the Pou Chen Group. In a filing made by the Pou Chen Group with the Taiwan Stock Exchange (TSE), the merger will be done through an exchange of stock. Currently, the Pou Chen Group and its associated companies hold a total 48.8% stake in Techview International Technology, which means that the merging of Digital Decade with Techview will not affect the rights and interests of Pou Chen's shareholders. Hong Kong

Telecommunications
ò Following announcement that its parent Hutchison Whampoa Ltd. and the groupÆs chairman have agreed to acquire Orascom Telecom Holdings Ltd., shares of Hutchison Telecommunications International Ltd. experience a sharp rise. Hutchison Whampoa earlier announced that it is taking a 14.2% stake in the Cairo-listed telecom firm in a deal valued at HK$7.5 billion ($962 million). Orascom operates networks in seven markets in the Middle East, Africa and South Asia. It bought a 19.3% stake in Hutchison Telecom from Hutchison Whampoa in 2005 for $1.3 billion. Hutchison Telecom operates mobile and fixed-line telecom services in Hong Kong, and mobile services in Macau, Israel, Thailand, Sri Lanka, Ghana, Indonesia and Vietnam.

Media, Entertainment and Gaming
ò PacificNet, Inc., a provider of gaming technology, Customer Relationship Management (CRM) and e-commerce in China, announced that it has signed a definitive agreement to acquire 100% ownership of Octavian International Limited, a worldwide supplier of gaming technology, solutions and systems. Under the agreement, PacificNet will issue restricted shares of PACT, which stand for an estimated 19.5% of PacificNet's outstanding shares. The company reported revenue of about $64.6 million, gross profit of about $18.4 million, and pre-tax profit of $5.5 million for fiscal year ending Dec 31, 2006. Industry observers see the acquisition as boosting PacificNet's overall gaming revenues and profits. Upon completion of the acquisition, PacificNet said Octavian would continue operating under its current name as a wholly-owned subsidiary of PacificNet. The deal would also see Harmen Brenninkmeijer becoming an executive director of PacificNet and a member of the board of directors. He will continue to serve as CEO of the Octavian subsidiary within PacificNet's gaming division. Octavian is headquartered in the UK. It develops and markets innovative games and systems and sells its gaming solutions in over 30 countries. Octavian is also one of the largest independent suppliers of back-end systems to casinos.

Mobile/Wireless
ò Following news that an institutional investor is unloading 150 million shares in Hong Kong-listed China Unicom, shares in the mainland's second biggest mobile phone operator experienced a decline. No announcement has been made on the Hong Kong stock exchange regarding the sale although media reports indicated that JP Morgan is managing the sale. Singapore/Malaysia/Philippines/Indonesia

Telecommunications
ò Bayan Telecommunications announced its plan to launch its cellular service in May next year. The Philippine-based company said it may offer the service on top of its CDMA-based wireless landline using GSM signal. The company said it is earmarking from 1.5 billion to 2 billion pesos ($36 û $48 million) a year for the next two to three years for its wireless landline service. The expansion will include additional network base stations, telecommunication infrastructure backbone and support systems.

Information Technology
ò British telecom (BT) and Singapore-based Frontline Technologies Corporation announced that they have entered into an agreement, which will see BT acquiring the entire issued share capital of Frontline for approximately S$202 million ($140 million). Frontline provides IT consulting, infrastructure services, systems integration, and IT outsourcing to local, regional, and multinational customers. The company, which is listed on the main board of the Singapore Exchange, has operations in China, Hong Kong, India, Indonesia, Malaysia, Singapore, the Philippines, Taiwan, and Thailand.

ò Bayantrade of the Philippines announced that it will hold its public listing in April 2008 to raise funds for its planned regional expansion, which includes its plans to acquire companies in Malaysia, Indonesia, and Thailand. According to its CEO, the company is looking to raising at least $6million from IPO. The company said that, aside from the funds to be secured from the IPO, it expects to generate internally cash to fund the planned acquisitions, with the company stating that it looks to having at least 280 million pesos ($6.7 million) in total revenues at the end of 2007. Bayantrade started as a consortium formed in 2002 by six of the country's biggest conglomerates composed of Aboitiz and Co., Ayala Corp, Benpres Holdings Corp, JG Summit, Unilab and PLDT. It was established initially to handle e-procurement services for these companies but has since expanded its business into outsourced IT services. In 2003, Bayantrade also became a local SAP partner and reseller in 2003. The company said it aiming to base its expansion abroad on its alliance with SAP, the German software maker.

Software
ò According to industry sources, two software companies under the portfolio of venture capitalist Global Gateway are getting ready for a public listing in 2008. The companies are Morph Labs, Inc., a software-as-a-service (SaaS) marketplace company and Exist Global, an information technology (IT) outsourced software development firm. They plan to list on the Philippine Stock Exchange in the first and second semesters of next year, respectively. Asian Alliance, the lead underwriter of MorphÆs listing stated that the software is expected to list in the second quarter of 2008. The two companies disclosed that the funds generated from the share sale will be used to boost their operations and to support a technology camp that will provide training to personnel to become competitive software developers.
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