a-week-in-tech-november-2127

A week in tech, November 21-27

A roundup of all the latest tech news.
Japan

Internet
ò Livedoor Co. announced its decision to sell its financial arm Livedoor Financing Holdings to Advantage Partners, an investment fund, despite earning around 70 percent of the group's total profits. Sources said that the Livedoor group would try to work on its recovery by focusing on its Internet portal services. Industry sources said the company plans to sell its shares in Livedoor Financial Holdings to Advantage Partners for about 17 billion yen (US$146.7 million). The sources said under the deal, the new owners will probably have to shoulder another 30 billion yen (US$259 million) in existing debts. In a separate development, the six-member board of Livedoor Co. revealed that everyone but the company president Kozo will step down during its December meeting. The board will also seek approval at the general meeting for an proposal to create a new board. The four members of the board will include an official from cable broadcaster Usen Corp. and three recommended by foreign investment funds, a lawyer and two foreigners. The foreign investment funds and Usen President Yasuhide Uno are expected to have a combined stake of more than 50 percent in Livedoor. Industry sources said the two have demanded the management shakeup. The major shareholders would take the initiative in rehabilitating Livedoor.

Mobile/Wireless
ò Industry sources said that NTT DoCoMo Inc. has announced its selection of Motorola Inc. and NEC Corp. to supply handsets for its so-called super 3G network. The report also said Fujitsu Ltd. would supply the base stations for the network, which is an upgrade to DoCoMo's existing third-generation (3G) infrastructure. The infrastructure is seen as enabling a faster download and upload of data such as video and music clips. For its existing 3G network, DoCoMo buys its network equipment from a range of suppliers including NEC, Fujitsu and Swedish maker Ericsson It mainly buys phones from domestic makers such as NEC and Matsushita Electric Industrial Co. but has also been adding new handset vendors for its existing network, including Nokia. DoCoMo said it has planned to have the super 3G network ready by around 2009.

ò NEC said it has reported rising losses following the decline in its sales of mobile phones and personal computers and its absorbing of restructuring costs. NEC posted a net loss of 7.4 billion yen (US$63 million) in the six months to September, but said it would be profitable by March. The company said its sales posted a 2.5 percent decline to 2.2 trillion yen (US$19 billion), even as its operating profit went up by 22.5 percent on demand for semiconductors and network systems. NEC indicated that its investment made for the upgrading of its semiconductor plants contributed to its losses. Market sources indicate that NECÆs mobile phone business has struggled with competition from rivals Sony and Toshiba in the domestic market, and from Nokia in international markets.

Media, Entertainment and Gaming
ò Culture Convenience Club (CCC), which operates Japan's biggest video rental chain, Tsutaya, announced that it will launch an online download service for films next spring. Under the plan, CCC subsidiary Tsutaya BB will eventually offer streaming and downloadable VOD services, as well as sales. The line-up will include 1,000 pictures, both Japanese and foreign. The agreement will see Tsutaya BB sourcing the contents, preparing films for downloading and managing online distribution. Another CCC subsidiary, Tsutaya Discas, will supply the service on its site, where it operates a CD and DVD rental service for 1.7 million members. Tsutaya stores served 19.3 million members as of the end of September, up 1.4 million or 7.6 percent compared with the same period the previous year. The stores recorded 416 million rentals in 2006, compared with 160 million theater admissions. In a related development, the company said Tsutaya Online had recruited 9.9 million members by the end of September, up 2.2 million or 28 percent over the same period the previous year. Tsutaya operates 1,275 rental video stores through Japan, as well as 851 that also rent CDs, 441 that offer games and 353 that sell recycled DVDs and other packaged software.

ò Advertising.com Inc., a subsidiary of AOL LLC, announced entering a deal with Mitsui & Co., Ltd. to create a new joint venture to serve the Japanese online advertising market. The venture will come under the name Advertising.com Japan. According to data from Mizuho Corporation Bank Research, the US$3.4 billion online advertising market in Japan, which is the worldÆs second-largest market, is expected to grow to US$4.9 billion by 2009. The venture is described as linking advertisers and web site publishers through a centralized network. Advertising.com currently operates the largest third-party display-advertising network in the U.S. Under the agreement, Advertising.com Japan will leverage Mitsui's established industry relationships with Japanese advertisers and publishers. Advertising.com will provide use of its proprietary ad serving and AdLearn optimization technology. In addition to Japan, Advertising.com has operations in England, Germany, France, Spain, Sweden, Norway, Denmark and Finland, with its headquarters located in the U.S. Advertising.com conducts strategic direct-response and brand marketing campaigns that guarantee bottom-line results for its clients. AOL is a global web services company that operates some of the most popular online destinations and offers a comprehensive suite of free software and services. Mitsui & Co., Ltd. is one of Japan's largest general trading companies. Financial terms of the deal were not announced.

ò GameOn Co. Ltd., a Japanese online game operator in which Webzen Inc. has an equity stake, announced that it will list on the Mothers Market. The Mothers Market is for the high-growth and emerging stocks in the country. GameOn Co. Ltd. was established in April 2001, and has been operating online games such as MU (Webzen Inc.) and Red Gem (Samsung Electronics Co. Ltd.). E-Samsung Japan and Softbank Co. Ltd. are the major shareholders, with Webzen Inc. holding 4.5 percent. The price will be set in the beginning of December, and the valuation amount will be determined later on.

Hardware
ò Sanyo Electric Co. said it expects to report a loss for the third straight year, with the company attributing the decline to a drop in the sales of mobile phones and digital cameras. The company said it forecasted a net loss of 50 billion yen (US$430 million) for the year ending March 31, 2007, compared to a May target for 20 billion yen (US$172.6 million) profit, and a record 205.7 billion yen (US$1.7 billion) loss a year earlier. Sanyo, however, said that its first-half loss narrowed to 3.6 billion yen (US$31 million) from 142.5 billion yen (US$1.2 billion) a year ago. The company said it has plans to spend an additional 40 billion yen (US$345.3 million) this fiscal year for 2,200 job cuts and other restructuring costs. To counter the competition from Chinese and Taiwanese manufacturers, Sanyo said it is forming partnerships with Taiwan's Quanta Computer Inc. and China's Qingdao Haier Group. Earlier, the company announced a handset-making venture with Nokia Oyj but nothing came out of this plan. In a related development, Sanyo disclosed its plans to sell its cell phone operations as part of a new restructuring plan following the losses it experienced.

ò In a bid to respond to the increasing demand for LCD televisions, Fujifilm Holdings Corp. announced its plan to invest 24 billion yen (US$206 million) on a new factory to make film used in LCDs. The company said the factory would start operations in April 2008, boosting production capacity for a series of film products that are used to protect the polarization plate in LCD panels and enhance LCD picture quality. Fujifilm is investing in flat panel display materials to boost growth and offset businesses in decline such as photographic film. Fujifilm controls 80 percent of the market for triacetate cellulose (TAC) film, an indispensable component that protects the polarization layer. Konica Minolta Holdings Inc. is the only other major producer holding about 20 percent of the market. Fujifilm said it has set aside some 110 billion yen (US$949.8 million) to build six production lines at a new production site in Kyushu, with the first line having begun production last month.

ò The president of Hitachi Ltd. said his company is studying a plan to promote plasma TVs abroad with Matsushita Electric Industrial Co. and Pioneer Corp. The marketing move is a response to the sharp increase in flat-screen TV sales in Europe and elsewhere. Market sources indicate that currently only LCD TVs are providing strong competition for plasma sets. According to DisplaySearch, shipments of LCD models outnumbered those of plasma TVs in the global market for 37-inch and larger sets for the first time in the July-September quarter. Hitachi identified Europe, North America and China as its target markets even as no specific details about when the three Japanese manufacturers will launch the joint promotional initiative or how extensive such efforts will be. Earlier in 2005, Hitachi set up an agreement with Matsushita to jointly develop and manufacture plasma TVs.
Korea

Internet
ò The government announced its decision to inject a total of 26.6 trillion won (US$28.5 billion) into building broadband convergence networks, or BcNs, over the next four years through 2010. At present, some 5 million subscribers have gained access to upgraded BcNs, and the figure is two months ahead of the target of 5 million by the end of this year. Speeds to 50M to 100Mbps in the fixed line and more than 1Mbps in the wireless area are qualified for BcNs. The government and the private sector already spent 200 billion won (US$214.8 million) in upgrading networks this year, which pushed telecom carriers to invest 6.8 trillion won (US$7.3 billion). According to the countryÆs Ministry of Information and Communication (MIC) some 7 trillion won (US$7.5 billion) is expected to be spent for upgrading subscriber and service networks next year, plus some 6 trillion won (US$6.4 billion) annually through 2010. KT is betting on T-commerce and real-time interactive shopping in telecom-broadcasting convergence; u-learning and u-campus for Kwangwoon University and seven high schools; and book-on-demand (BoD) service. SK Telecom is investing in 3.5G HSPDA and Wi-Bro service. LG Dacom is upping ante on QPS (broadcasting + broadband Internet + Internet telephony + wireless communications) and IPTV. Hanaro Telecom plans to roll out IPTV service following the launch of Hana TV this year, and is also setting its sight on home network-linked convergence service.

ò SK Communications and Empas said they have teamed up to introduce a new search engine service, with the two companies reallocating workforce as a part of efforts to launch a joint service in three to six months. With three high-ranking managers who worked for SK Com recently joining Empas and a new department called strategic planning also opened, it is expected that the synergy between the companies will be maximized. Some 30 and 40 SK Com managers and experts are further expected to join Empas, pushing its workforce in the search area to 200 from the current 150 to 160.

ò The country's two largest portals, Daum Communication and NHN (Naver), announced that they have recently hired a large number of researchers in the data processing, multimedia video and IPTV area. R&D workforce now accounts for some 60 percent of new employees hired by the two companies this year, respectively. Most of its new employees also specialize in video service and new media service such as digital multimedia broadcasting (DMB) and IPTV. The move from web service developers to researchers specializing in next-generation service is expected to spark similar moves among other portals. Daum hired some 260 people this year, of which 58 percent have been allocated to research and development on web service, large-capacity data processing technologies, video service such as Internet broadcasting and next-generation new technologies including DMB and IPTV. Daum said that to become leaders in the Internet media service, including web 2.0, the company is now devoting more R&D resources to data processing, video, broadcasting and IPTV. NHN is taking a different approach, securing an R&D workforce through mergers or stake deals. The company bought a search engine firm First Snow this year, and formed a stake deal with storage virtualization solution vendor Data Chorus.

ò Lycos, an affiliate of one of the country's leading portals Daum Communications, announced that it is making a comeback. According to reports by Reuters and PC World, Lycos will launch a high-speed Internet video channel this week and let viewers watch movies simultaneously across the Internet and discuss them. The service is to be called Lycos Cinema and will aim to combine two practices of new Internet businesses embodied by popular sites YouTube and News Corp.'s MySpace social network. Lycos said it is using proprietary technology to enable viewers to watch synchronized videos on the web. The company compared its ability to offer such a service with massive, never-ending online games such as Warcraft and Second Life, which host hundreds of thousands of players. Lycos users will be able to watch films and create public chatrooms to invite other potential viewers. Viewers in any particular viewing room can type comments on the window, while watching the movies that are streamed at the same time.

ò GoPets, a firm that provides a world of interactive 3D pets roaming across the Internet, announced that it has secured a strategic investment from Liberty Media Corporation. Other key investors in GoPets include China's Tencent Holdings Limited and South Korea's Nexon Corporation. Tencent provides a large range of China-based Internet and mobile value added services, such as instant messaging, online games and virtual pets. Nexon is the operator of Crazyracing Kartrider in Korea. Based in Korea, GoPets provides virtual pets aimed at creating global friendships among GoPets players. Terms of the transaction were not disclosed.

Mobile/Wireless
ò According to South KoreaÆs three mobile telephony service providers, the number of people who connected to the Internet with handsets topped 20 million last month. The report indicated that about 15 percent of these individuals, corresponding to some 3 million users, did their searches using a variety of keywords with their mobile handsets. Currently, query results come from data registered on limited wireless Internet architecture. To cope with this, SK Telecom entered an agreement with Google last month to develop a next-generation search engine, which the firm expects will expand the horizon of the search services on handheld gadgets. KTF is also working on coming up with an advanced search engine tailored for cell phones.

ò Industry observers note how the countryÆs mobile broadcasting industry is seeing free services losing ground to fee-based offerings. This year, South KoreaÆs mobile TV market was dominated by free services, dubbed terrestrial digital multimedia broadcasting (T-DMB), as opposed to paid for services from satellite DMB (S-DMB). From its debut in December, T-DMB, a free service has attracted up to 1.8 million users in comparison to 900,000 subscribers of S-DMB, which started in May 2005. By the middle of September, things started to change in favor of S-DMB, with their corresponding inexpensive S-DMB phones sold, released in the market. According to the mobile TV market consultancy Atlas Research Group, in the third week of September, S-DMB handsets outsold T-DMB phones for the first time in several months, with S-DMB phones selling 33,000 units during the span while sales of T-DMB handsets amounted to 24,000. During the first two weeks of November, S-DMB attracted about 9,000 customers over 6,000 for T-DMB.

ò Subscriptions to Korea's satellite mobile TV services are expected to break 1 million by next month. TU Media, which offers the services in Korea, says over 900,000 customers have already signed up for the high-tech mobile phone service dubbed DMB. The company attributed the increase to the availability of more cell phones equipped to receive satellite broadcasts and a continued drop in subscription costs to less than US$20 a month.

Media, Entertainment and Gaming
ò Industry sources indicate that Lineage II, a representative game of NCSoft is fast growing in terms of global presence. NCSoft announced that the number of people who access lineage II in the North-America and Europe has gone beyond 100,000 a month, with the number constantly rising after opening 'Chronicle V' this September. Lineage II, which was initiated from 2004 in North America, has posted 25 percent growth only this year due to the aggressive marketing of its North American subsidiary. It is making solid ground as a successful online roll playing game in the Asian and the western markets, breaking the highest record of simultaneous users, in Japan. Lineage II has now secured 14 million subscribers in the global market including Taiwan, China, Japan, North America, Europe, and Thailand, Having started the commercial service from October in 2003 in Korea.

ò Market sources disclosed that Robert Garriott, one of NCsoftÆs board members, made block sales on 100,000 NCsoft shares, at 56,000 won (US$60) per share. Before these stock sales, Garriott owned a total of 956,335 shares. The disclosure said that he sold 10.5 percent of his total equity ownership for personal reasons, with no plan to sell any more shares in the near future. The reports also said that Richard Garriott, executive producer at the firmÆs Austin studios, sold 50,300 shares in May 2006. His equity ownership in NCsoft before stock sales was 993,935 shares. He sold 5.1 percent of his total equity ownership for personal reasons and he does not plan to sell any more shares in the near future.

Hardware
ò According to the industry, three HSDPA terminal makers, Samsung Electronics, LG Electronics, and Pantech, are trying to put off the release of its terminal to next year even though KTF declared the nationwide service of HSDAP for March. Industry observer note that Samsung Electronics is more cautious since it had suffered from the functional problems, for its W200 DBDM terminal released in June last year in accordance with HSDAP commercialization. But KTF declared the release of the SBSM terminal in the year six months ahead of SK Telecom, criticized the makers being too cautious since makers including Samsung had already exported the HSDAP terminal to the global market. The makers are concerned that they have to cope with consumer complaints caused by its unfinished network service for the HSDAP phone. In fact, KTF plans to build an HSDAP network in 84 cities, covering 94 percent of the population, before releasing the SBSM terminal.

Telecommunications
ò KT Corp., the country's largest fixed-line and broadband operator, announced the launching of a trial Internet protocol television service to be rolled out to 260 households in eight districts in Seoul and Yangpyeong County. These are areas where broadcasting signals are often weak or distorted. The trial service will provide over 24 TV channels, 1,200 on-demand videos, and 27 interactive services ranging from education to finance to instant messaging. An electronic program guide and user-created content will also be available. The launch of IPTV in the country has been deferred due to a conflict between the Information and Communication Ministry and the Korean Broadcasting Commission, which both claim the service under their control. After months of discussions, the two agencies selected two consortia led by KT and Daum Communications. Officials disclosed that KT's trial service will be evaluated in terms of technical quality, service quality, policy and performance, officials said.

Information Technology
ò Industry sources report the creation of a new concept credit card issued and managed by wireless communications for the first time in the world, and is used with several credit cards embedded into one mobile phone. Several companies including BC Card, SK Telecom, KTF, LC Telecom, and Harex Infotech said that BC mobile card business will start next February. BC mobile card is a chip embedded in a mobile phone with credit card functions. Unlike existing mobile phone cards where one credit card was embedded into one mobile phone, now credit cards of several banks can be embedded in a phone for usage. To launch the business, BC Card will build a service platform and marketing service, with the three telecom companies providing a communications network for the service and developing a mobile phone. Harex Infotech would provide solutions for the service.
China

Internet
ò Industry sources said that Siemens AG may withdraw from the Internet TV market in China after the German industrial conglomerate has dismissed its team in charge of Internet Protocol Television in China. Earlier, the company lost a bid to cooperate in the launch of IPTV services in Shanghai. China Telecom Corp. and Shanghai Media Group in September launched a joint Internet TV service. Shanghai Media Group is the first company in China to receive a license from Beijing to run IPTV.

ò Shui On Land, a mainland property developer, announced its partnership with Cisco Systems to design and build Internet-linked residential and commercial projects across China. Earlier in September Shui On Land raised by way of an IPO some HK$6.2 billion (US$797 million). Shui On and Cisco signed a memorandum of understanding to start their initiative by establishing a digital community in Shanghai. Shui On formed its first IT-related strategic relationship in 2005 with Oracle, which will initially focus on establishing an Advance Technology Solution Centre in Yangpu. Under the deal, Shui On's strategy will involve an extensive use of the Cisco Connected Real Estate (CCRE) framework, which uses Internet protocol networking communications technologies in the foundation of building design and development. The Cisco framework will be introduced in Shui On's Knowledge and Innovation Community (KIC) project in a 61-square kilometer area with a population of more than one million and home to more than 100 research institutes, 14 universities and colleges. The 840,000-square meter KIC project is a six-year development with support from the Shanghai government. Analysts see the relationship with Shui On as deepening the mainland market presence of Cisco, which dominates sales of networking equipment to large enterprises and service providers in China.

ò The top official of Hurray! announced that the company is not involved in any merger with Mop.com. Earlier, a rumor circulated stating that Mop.com, which is seeking an IPO, might merge with Hurray! but the company said the cooperation is merely built around business services. Hurray! announced that it will shift to the digital entertainment field and focus on developing music and games service, with the company aiming to boost its share in the music market from less than 10 percent at present to 25 percent in the next two to three years.

Media, Entertainment and Gaming
ò Industry sources said that China Central Television reported bringing in a record 6.8 billion yuan (US$865.6 million) at its annual auction of prime-time advertising slots, with the auction registering a 16 percent increase in ad sales revenue from last year's 5.9 billion yuan (US$751.1 million). The auction saw about 180 companies participating in the bidding, with about 70 percent coming from the consumer goods sector, such as food and beverage makers. The auction saw also a new trend in the participation of local banks. Industry observers noted how increased ad spending kept pace with the growth in consumer spending, especially with the country recording a13.6 percent growth in retail sales to 6.2 trillion yuan (US$789.2 million) during the first ten months of the year. P&G of U.S. became the biggest spender at the auction for the third consecutive year with the company shelling out 420 million yuan (US$53.4 million).

Mobile/Wireless
ò China.com, a GEM-listed provider of mobile value-added services, announced that it is selling its loss-making online game business to its controlling shareholder for up to HK$1 billion (US$128.5 million). The deal is seen as leading to the spin-off of the online game business under the name CDC Games and a listing of the unit either on Hong Kong's main board, NASDAQ in New York, or in London. The transaction is subject to independent shareholders' approval. NASDAQ-listed CDC Corp is the controlling shareholder of both companies, holding 77 percent of China.com. Under the deal, China.com will sell all the assets of its wholly owned online game business, which operates mainly as Beijing 17game Network Technology, for a total consideration of HK$858 million (US$110.2 million) with an additional HK$195 million bonus (US$24.9 million) to be paid subject to a listing. A first tranche of HK$390 million (US$50.1 million) will be settled in cash at the close of the transaction scheduled for December, with the HK$468 million (US$60.1 million) balance to be paid in the form of a promissory note bearing an interest rate of 5 percent a year. The company said it will use the proceeds to fund future transactions. The market capitalization of CDC Games is placed at around US$500 million.

ò Foxconn disclosed plans to invest US$1.2 billion to build a new mobile phone factory in mainland China in order to further expand its business. Foxconn's new mobile phone factory will be located in Langfang, Hebei Province, which is known as the Silicon Valley of China. At present, the Taiwan-based Foxconn is working as a mobile phone OEM for Nokia and Motorola. Company sources indicate that Foxconn's existing factories in Shenzhen and Beijing cannot meet the company's growing needs in the coming years, which is the main reason that they have decided to set up the new factory. At present, Foxconn holds about 48.5 percent of the mobile phone OEM market in the world. It is estimated that the company's revenue in 2007 will grow by 50 percent compared with that of this year.

ò The countryÆs Ministry of Information Industry together with China Mobile, China Unicom and some major firms including Sina.com have announced the initiative dubbed the China Green Mobile Phone Culture Construction Alliance. The group said the alliance is aimed at working towards terminating illegal and unsolicited short messages. Under the agreement, members of the alliance have pledged to work on regulating their own operations and service behavior. Statistics issued by the group showed that mobile phone users in China receive an average of 8.2 unsolicited short messages each week. Out of these figures, some 54 percent are fraudulent and 48 percent Chinese sex messages.

Semiconductors
ò Semiconductor Manufacturing International Corporation (SMIC) and Saifun Semiconductors, a provider of Non-Volatile Memory technology, announced entering an agreement to work jointly on delivering 8Gb Data flash using SMIC's advanced process technology. The product which is expected to reach the market in 2008, will be based on the Saifun Quad NROM technology and designs, is expected to hit the market in 2008. Saifun Quad NROM four-bit-per-cell technology represents a breakthrough in existing NVM technology by doubling the storage capacity of conventional memory cells and providing a simpler architecture that requires fewer manufacturing steps and reduces manufacturing costs. The development of 8Gb Data flash on SMIC's advanced process demonstrates the advantages of Quad NROM in enabling the most cost-effective Flash manufacturing processes on the market today. The agreement is seen as enabling SMIC to enter the Flash market with reliable, high performance products. SMIC aims to provide a comprehensive flash product offering to tap into the emerging consumer electronics market in China and globally.

Software
ò China becomes one of SkypeÆs top markets as the firmÆs total registered users in the country hit 25 million. Skype's VoIP software first made its entry to the Chinese market in November 2004 and has become very popular since then. Skype announced that it is developing a new product. A representative from Skype China, which is partnered with Tom.com, discloses that in the new innovative product, the functions of Tom-Skype will be improved and will focus on more featured services, particularly on voice quality and text transmission. Market sources indicate that Tom-Skype has become the fastest growing IM tool as it posts a quarterly growth rate of over 100 percent. The company predicts that registered users of Skype will exceed that of MSN by next year.

ò Kingsoft announced the signing of a deal with the Agriculture Bank of China (ABC) for its WPS Office software products. The deal is reported to be valued at more than 10 million yuan (US$1.2 million) even as the two companies have not revealed any financial details of the agreement. The WPS Office system involved in the agreement between Kingsoft and signed with ABC, is a mix of different office softwares, which include word processing, form processing and graphics programs. It also features higher security and systems based on ABC's high demand for system stability and safety.

Hardware
ò ZZNode Technologies, which provides operational support systems to mainland telecommunications operators, announced its plan to introduce a software system linked to China's 3G-mobile services expected to be launched in April. While nothing has been disclosed yet, sources said the identity of the telecommunications operator ZZNode has signed with has a contract for its new generation network and will cover 3G services in 31 provinces. The government is expected to issue at least three 3G licenses next year, one of which will be for the domestic standard. Beijing-based ZZNode has eight product lines, with one focused on developing its new generation network, which allows massive transmission of multimedia data such as short messages, pictures and videos over 3G networks. The other product lines are developing operational support systems for older mobile services. ZZNode posted a 68 percent growth in first-half net profit to 9.5 million yuan (US$1.2 million) as sales jumped 46 percent to 62.5 million yuan (US$8 million).

ò Zhuhai in China's southern Guangdong has become the largest MP3 chip production base in the world as it holds about 40 percent of the global market share. Reports from a recent technology conference in Zhuhai show that the information industry has become the top industry in Zhuhai, where the general output of the information industry has contributed 40 percent of the city's total industrial output value. The area also boasts software and IC businesses, posting annual growth of 40 percent. There are 15 IC companies in Zhuhai with a complete production link. It is estimated that the sales volume of Zhuhai's IC industry will reach 1.6 billion yuan (US$203.6 million) this year. According to a recent report from GFK, an industry-analyst company, throughout March, April, and May 2006, the Chinese MP3-player market was in a downturn. During that period, the market experienced negative growth.

Ventures/Investments
ò Neo-Neon Holdings, a world leader in decorative lighting, announced the pre-marketing of its US$300 million IPO, as it plans to list shares on the Hong Kong Stock Exchange next month. The company expects its 2006 profit to post a growth of 82 percent, ascribing the surge to the sale of more high-margin products and cost cutting. ICEA and Deutsche Bank are the listing sponsors while BNP Paribas is one of the arrangers. Market sources said that LED lighting products have profit margins of more than 50 percent, compared with 30 percent for traditional incandescent lighting products. The company boosted the proportion of LED products to 31 percent of total sales in the first half of this year, from 2.7 percent in 2003. BNP said LED product share of sales should reach 58 percent in 2008. BNP estimates the company's profit will be HK$259 million (US$33.3 million) this year, up 82 percent from HK$143 million (US$18.4 million) a year ago, with turnover rising 47 percent to HK$1.4 billion (US$180.4 million) from HK$971 million (US$125.1 million) previously. The firm distributed 46 percent of its earnings as dividends last year, leaving about HK$186 million (US$24.0 million) net cash balance at the end of the year. BNP estimated sales from China would jump to around 20 percent of the firm's turnover in 2008 from 7 percent in 2005.

ò The China Banking Regulatory Commission released the approval allowing Motorola China to set up a solely owned accounting company in China. The new company will be the first foreign accounting company in the city of Tianjin. . It has a total registered capital of 100 million yuan (US$12.7 million) and will provide bank loans, deposits, financing, financial services and finance consultant services to Motorola's seven affiliates in the country. The country said it has set up the accounting company in a bid to strengthen the centralized management of the firmÆs capital.

Information Technology
ò Avery Dennison announced the launching of its RFID business in Asia Pacific and the introduction of its technology-transfer initiative to provide better capabilities and support for the region's RFID label converters. A top company official said that the RFID market in China is forecasted to go beyond 5 billion yuan (US$636.5 million) by 2009. The technology is widely used in supply chain, asset tracking, retail, and inventory management. The company said the technology transfer initiative is part of Avery Dennison's long-term strategy in China, which has been operating in China since 1995. In 2000 the company opened the Avery Dennison Self Adhesive Label Converting College in Kunshan, China, offering both introductory and advanced level training programs to label printing professionals throughout the Asia Pacific region, followed by the opening of the Avery Dennison Asia Technical Center in 2005. Avery Dennison disclosed that it has invested an estimated US$175 million in China since it started operations in the country in 1995, and expects its total investment in China to total more than US$275 million by 2010.
Taiwan

Semiconductors
ò Carlyle Group disclosed that it is in talks to buy Advanced Semiconductor Engineering, the world's largest computer chip packager, for US$5.7 billion. Carlyle's proposed purchase would add to recent acquisitions the firm has made in the semiconductor business. In September, it was part of a group that agreed to buy Freescale Semiconductor for US$17.6 billion, in the biggest technology buyout ever. Advanced Semiconductor packages chips in plastic or ceramic housings and adds connectors so they can be assembled as part of computers, game consoles, cell phones and other electronic instruments. Advanced Semiconductor confirmed the Carlyle offer and the participation of Jerome Chang, Advanced Semiconductor Engineering chairman who holds a 9.9 percent stake in the firm. According to the Semiconductor Industry Association, global chip sales could increase 9.4 percent this year. Goldman Sachs Group is CarlyleÆs adviser on the takeover bid. Earlier in July, Carlyle announced that it raised US$1.8 billion for its second Asia buyout fund, which will focus on investments in Asia outside of Japan.

ò Solar cell maker E-Ton Solar Tech announced that it has signed a contract with Japan-based silicon wafer supplier M.Setek for a total wafer supply equivalent to about 700 MWp (megawatts peak). The agreement is good for a period of 10 years from January 1, 2007 to December 31, 2016. E-Ton did not indicate the prices for the supply in a deal that the company described as necessary in facilitating its capacity expansion and securing a source of materials.

ò Inotera Memories revealed its plan to issue NT$10 billion (US$304.8 million) worth of corporate bonds to pay debt. In its filing at the Taiwan Stock Exchange, the company said that the issue duration will be either five or seven years, depending on market response. The company president was quoted as stating that Inotera has almost raised the NT$48 billion (US$1.4 billion) planned for capital expenditure in 2007, including the NT$10 billion (US$304.8 million) from this bond issue, profit from 2006 and a planned bank loan.

Hardware
ò Jabil Circuit, Inc., a global electronic product solutions company, announced that it is going to launch a tender offer to acquire 100 percent of outstanding shares of Taiwan Green Point Enterprises Co. for NT$109 (US$3.0) per share in cash through a wholly owned Jabil subsidiary. The acquisition includes nine Asian plants, including seven located in China and one in both Taiwan and Malaysia. The purchase price, depending upon final shares outstanding and the exchange rate at the time of the closing is anticipated to be between US$875 and US$900 million. Citigroup is acting as an exclusive financial advisor to Jabil in this transaction. Jabil is an electronic product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies.

Software
ò CyberLink, a Taiwan-based developer of digital home software solutions, released a formal denial of market rumors that Microsoft is interested in acquiring the company. The circulating news apparently caused CyberLink's stock price to rise on the Taiwan Stock Exchange for five consecutive days. In response to the rumor, Microsoft Taiwan emphasized it has neither heard about such a merger plan nor received any related information from Microsoft headquarters.

Telecommunications
ò Chunghwa Telecom (CHT) announced that it will consolidate its subscriber service centers throughout Taiwan into one center to service its customers as well as other businesses on a commission basis. The company said the center is to be established in January of 2007 with formal operations to begin in June. The call center will have a staff of more than 3,000, the largest one in Taiwan. A company official emphasized that the center will be a profit center by offering customer services for private companies, organizations and government units. In a related development, CHT is reportedly negotiating a merger of Wretch, a Taiwan-based blog/photo web portal.


Hong Kong

Telecommunications
ò PCCW chief Richard Li issued a statement to the effect that he looks to minority shareholders of the Singapore company to rejecting the sale of a 23 percent stake in the company for US$1.1 billion. Li's stake is held through Singapore-listed Pacific Century Regional Developments (PCRD) and he is not allowed to vote at the meeting because of his father's involvement, meaning minority shareholders can reject the deal. The statement is seen as the latest twist in the sale of the stake. Li was quoted as saying he was "very unhappy" with the involvement of his father after he helped finance the sale to his long-standing friend, local financier Francis Leung. Reports also indicate that Richard Li was willing to stay at the helm of Hong Kong's largest fixed-line telecommunications carrier.

ò Hutchison Telecommunications International Limited announced that its Indian subsidiary Hutchison Essar Limited has received Letters of Intent from Department of Telecommunications (DOT) for licenses in the six license areas in the country. A Letter of Intent from the DOT is its offer to issue a license upon the applicant's acceptance and payment of the relevant fees. Hutchison Essar expects to launch in these license areas during 2007. Hutchison Telecommunications International Limited is a leading global provider of telecommunication services. The Group currently offers mobile and fixed-line telecommunication services in Hong Kong, and operates or is rolling out mobile telecommunication services in Macau, India, Israel, Thailand, Sri Lanka, Ghana, Indonesia and Vietnam. It was the first provider of 3G mobile services in Hong Kong and Israel. Hutchison Essar Limited, under the brand name Hutch, operates in 16 license areas in India and has about 20.4 million subscribers as of September 30, 2006.

Internet
ò PacificNet Inc., a Hong Kong-based provider of customer relationship management, mobile Internet, e-commerce and gaming technology, reported a loss in the third quarter, attributing it to new wireless services billing policies in China. The company posted a loss of US$1.1 million, compared with a profit of US$611,000 during the same period last year. Its revenue went up by 17 percent to US$12.9 million from US$11 million in the year-ago quarter. PacificNet disclosed that its revenue from value-added services registered an 18 percent year-over-year drop to US$2.4 million. PacificNet said it recorded a charge of US$800,000 for liquidated damages related to issuing convertible notes. The company reported higher capital expenditures, increased staff costs and increased rent, electricity and other expenses related to a call center expansion. The company said it has hired financial advisers and bankers to consider options for its low-margin telecom business units, which may include sales, disposition, spin-offs and mergers. It reduced its fiscal year 2006 guidance to earnings of US$1 million to US$1.2 million on US$60 million to US$65 million in revenue. For 2007, PacificNet said it expects to earn US$3.4 million to $3.8 million on US$62 million to US$67 million in revenue.
Singapore/Malaysia/Philippines/Indonesia/Australia

Media, Entertainment and Gaming
ò According to a company official, Al Jazeera English has selected Kuala Lumpur as one of its four broadcast centers around the world over Hong Kong and Singapore. The official was quoted as saying that the choice of the Malaysian capital was made for "sound operational reasons" over the other two cities. Al Jazeera also indicated that Kuala Lumpur is special when it took into account the tax basis offered by Malaysia's Multimedia Super Corridor on which its facility is located. The media company said Kuala Lumpur was also chosen because of the close cultural and political ties between Qatar and Malaysia and the availability of a good pool of English speakers.

Information Technology
ò Communications network solutions provider Cisco Systems (Malaysia) Sdn Bhd said it expects to see a significant 200 percent growth in its small and medium business (SMB) division by July next year. The company said the sector currently contributes less than 10 percent to its business in Malaysia but this is set to change. The company's confidence is based on several factors, including the attention given by the government to the sector under the Ninth Malaysia Plan and Cisco's own plans for it. The company said it sees tremendous opportunities in the SMB sector and we are going all out for them, putting in various programs to address their needs and ensure that these businesses are technology-enabled. While Internet penetration among the 36,000 SMB business operations in the country (companies with an employee size of 20 to 250) has reached 89 percent, which means these companies have adopted basic infrastructure, including websites, the adoption of extended online applications remains at a dismal low of one percent. Because of this, Cisco is talking to Internet service providers such as Telekom Malaysia to make it easier and more cost-effective for the SMBs to adopt networking technologies. Cisco expects to establish a program presence in almost all cities by July next year.

Ventures/Investments
ò Seven Network announced its decision to form a joint venture with a U.S.-based private equity firm in a deal valued at about US$3 billion. AustraliaÆs second-largest broadcaster confirmed it had gone into a deal to sell 50 percent of its media business to Kohlberg Kravis Roberts (KKR). Under the deal, KKR will inject A$735 million (US$573.2 million) into the new Seven Media Group, which will embrace Seven's television, magazines and online businesses, including its 50 percent stake in joint venture Internet portal Yahoo!7. The venture comes as media companies compete to position themselves before a milestone relaxation of ownership rules that looks set to change Australia's media landscape when the law comes into force early next year. The move has parallel in what PBL did a month earlier when it announced a US$3.4 billion deal to spin off its key media assets into a separate company, which will be jointly owned by PBL and Hong Kong-based private equity group CVC Asia Pacific. The company said the Seven-KKR tie-up as showing Seven's competitive broadcast television and magazine publishing businesses and rapidly developing Yahoo!7 partnership, which had provided the platform for Seven's development in online and new content delivery platforms.
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