A week in tech

A round up of all the latest tech news.

Japan

Internet

- kabu.com Securities Co., an online brokerage, will offer its customers free investment analysis tools to aid them when buying or selling stocks. The Internet-based service will be provided only to those who have accounts with the firm. Since stock prices will be updated with delay of just five minutes, the tools will be useful for day traders as well as investors engaging in longer-term deals, the sources said. The recommendations are based on the analysis of the price movements of all listed shares over the past two years using 11 technical indicators, including the "psychological line," which is calculated based on price changes during the latest 12 trading days.

Mobile/Wireless

- NTT DoCoMo announced that it has agreed to acquire a 40 percent stake in Tower Records Japan, making it the largest shareholder in the top retailer of music software. The acquisition will put Tower Records under the control of the cellular phone service operator. DoCoMo will purchase part of the stake held by Nikko Principal Investments Japan Ltd., currently the biggest shareholder in the firm. It will also buy shares through a third-party allotment. The acquisition is valued at over 10 billion yen ($84.8 million). In their first business tie-up, DoCoMo will try to expand the number of subscribers using its cell phone offering e-money and credit card functions through the 78 music stores operated nationwide by Tower Records. The phones will allow DoCoMo subscribers to buy CDs and receive discount vouchers at the shops without using cash. Tower Records will try to put the shopping data generated from the electronic sales to good use in its own marketing. DoCoMo expects its partnership with the top music retailer to help expand subscriber use of the special functions. For its part, Tower Records has apparently decided to join hands with DoCoMo in hopes of gaining a stable shareholder that can provide it with synergy. Tower has revealed its plans to go public in the future, with DoCoMo intends to maintain an equity interest of 33.4 percent or more in Tower Records. This stake that will give NTT DoCoMo decisive voting power even after Tower becomes a listed company.

- The Ministry of Communications has allowed Softbank, eAccess and IPMobile to enter the cell phone industry to stimulate competition, government sources said. The three firms are expected to begin operations in fiscal 2006, becoming the first new entrants into the sector in 12 years. The ministry will permit Softbank and eAccess to use the 1.7GHz bandwidth under conventional telecommunications methods, while letting IPMobile tap the 2.0GHz bandwidth, which uses a transmission technology called TDD. The three new entrants aim to devise new price scales and services that will differentiate them from those offered by existing players in the business, including NTT DoCoMo Inc. Softbank is studying a plan to merge its broadband and cell phone services, and is considering working with its group firm, Yahoo Japan Corp. to transmit videos via cell phones, company officials said. Besides operating their own cell phone services, eAccess and IPMobile aim to lease their cell phone lines to other companies, sources at the two firms said.

Hardware

- Produce, a 3D application machinery maker, said it has received approval to list on the JASDAQ Securities Exchange. The company will offer 5,100 shares to the public in its initial public offering. Of those, 4,000 are newly issued shares and 1,100 are shares currently held in private. Daiwa SMBC Securities, the lead underwriter of the offer, also has a green shoe option, allowing it to offer an additional 500 shares in the event of exceptional demand. The company expects to net 1.7 billion yen ($14.4 million) from the IPO, and plans to use the IPO proceeds for the acquisition of a production facility, repayment of loans and working capital. For the current fiscal year through June 2006, the company forecasts a parent pretax profit of 547 million yen ($4.6 million), net profit of 357 million yen ($3 million), and sales of 5.1 billion yen ($43.2 million). Last fiscal year, the company posted a parent pretax profit of 212 million yen ($1.7 million), net profit of 107 million yen ($906,000), and sales of 3.1 billion yen ($26.2 million).

- NEC Corp revealed its plans to boost its LCD panel operations in China, by raising its capacity at its Shanghai joint venture, broadening production to include LCD panels for televisions as well as for computers. Shanghai SVA NEC Liquid Crystal Display Ltd., a joint venture between NEC and Chinese electronics and components company SVA (Group) Co., began full-scale operations of its fifth-generation production line in January and is now making LCD panels at a rate of 52,000 units a month. The plan involves an investment of approximately 48 billion yen ($406.6 million) to double the line's production capacity to 100,000 units over the next 12 months. The existing line has already begun to ship samples of a prototype 26-inch panel. In addition, NEC and SVA (Group) will soon begin construction on a sixth-generation facility and a seventh-generation facility near the joint-venture factory. The sixth-generation line will start up in 2008 with the capacity to make 60,000-90,000 panels, while the seventh-generation line will start up in 2010. The total investment is expected to exceed 300 billion yen ($2.5 billion).

Semiconductors

- SUMCO Corp. announced its plans to go public on the first section of the Tokyo Stock Exchange, a move that will make it this year's biggest listing, as it would raise over 100 billion yen ($847.1 million). The company was founded as a result of Mitsubishi Materials Corp. and Sumitomo Metal Industries Ltd. integrating their silicon wafer divisions. SUMCO, formerly known as Sumitomo Mitsubishi Silicon Corp., has the second-largest share of the global market for silicon wafers after Shin-Etsu Handotai Co. SUMCO expects a 75 percent increase in its profit to 19 billion yen ($161 million) for this business year, in view of growing demand for semiconductors used in digital equipment. The company will raise some 60 billion yen ($508.2 million) through its initial public offering of new shares and will use the funds for capital spending. Under the tentative public offering terms, SUMCO is expected to raise 126.5 billion yen ($1 billion) to 143.9 billion yen. ($1.2 billion).

Telecommunications

- Tokyo Electric Power announced its plan to acquire Fusion Communications, a Tepco group fixed-line phone service provider, from PoweredCom, a move seen as an interim step before eventually selling it off. Under the deal, Tepco will acquire the controlling 54 percent stake that PoweredCom, a Tepco telecom subsidiary, holds in the firm. Japan's largest electricity company has been negotiating with major ADSL service provider eAccess Ltd. about the possible sale of Fusion Communications, but their talks have apparently bogged down over a buyout price. After purchasing Fusion Communications, Tepco will continue sounding out eAccess and other companies about a possible sell-off. Tepco has been looking for a buyer for Fusion Communications ever since the telecom firm was excluded from a business plan to be pursued by an entity slated to be formed in January through a merger of PoweredCom and KDDI Corp.

Korea

Internet

- Powercomm subscribers surpassed the 100,000 market in just two months since starting its retail business on September 1, this despite the fact that they were not allowed to sign new subscribers for 18 days. Powercomm announced that subscribers hit 101,060 on Nov 3rd, and that they now have 102,000 subscribers as of November 6. It took Thrunet 12 months to reach this level when it first started commercialization in 1998. It took Hanaro Telecom six months in 1999 and KT nine months in 1999 to reach the 100,000 mark. Despite the 18-day ban on adding new subscribers, Powercomm intends to keep its full year subscriber target of 500,000 (including Dacom subscribers), a target of 1 million for 2006 and 1.6 million for 2007.

- Reigncom, the parent company of iRiver, announced that it would develop a game device supporting WiBro in cooperation with KT, the dominant telecom provider of Korea. The device is expected in August 2006. Reigncom also plans to create a game portal site and platform to provide better service for WiBro game devices. The portal site will offer game, video streaming, music, messenger and chatting services for the users of WiBro devices. KT's services and portal web sites will be available on the device. In order to stimulate demand for WiBro service and game devices, the two partners will launch a joint marketing utilizing their sales networks.

- KT's Wibro service is set to operate on Linux, an open source OS. Redhat Korea, world's leading provider of Linux and open source technology, announced that it signed up a supply contract with KT to offer RHEL3 as OS for KT's WiBro infrastructure. Redhat provides RHEL 3 ES and RHEL 3 AS for 73 servers of KT, which will be applied to search, news, cartoon, community, and message services of WiBro. Game, MOD, LBS, DRM, subscriber management, authentication, authorization, and accounting of WiBro service will be based on RHEL 3. KT's WiBro networks consist of four projects including billing system, Authentication, Authorization, Accounting system, service platform and NMS system.

- Hanaro Telecom announced the launching of the onboard internet services under business alliance with the country's two flagship carriers - Korean Air and Asiana Airlines. However, the availability of the in-flight web access services, dubbed Hanafos Air, will be limited to top-line Boeing aircrafts. For now, Internet services are offered in three long-haul Korean Air routes from Incheon International Airport to Los Angeles, Seattle and Chicago in the United States. The country's biggest carrier plans to add two Internet-accessible routes to New York in the US and Frankfurt of Germany early next year. Asiana Airlines, the runner-up player, is providing Internet access services on their long-distance routes to Seattle in the US and Ho Chi Minh City in Vietnam.

- Korean venture firms are reportedly ready to face the major internet companies by launching their own desktop search programs with more advanced features, with three mid-sized firms - Konan Technology, 3soft, and Korea Wisenut - planning to sell their inside-PC desktop search programs from next month. While the big companies Google, Microsoft, Yahoo of the US and NHN of South Korea are trying to lure individual users with their products, the minor competitors are mainly targeting enterprises by specializing in search programs in Korean. Desktop search programs help users locate documents or files saved in their PCs, as opposed to web search systems that help people search for information on the Internet. South Korean portal Naver launched a beta version of its product this month, while Daum, Empas and Yahoo Korea are expected to follow Naver's lead before year's end. The small firms remain confident, however, of their technological edge over the major portals.

- Daum Communications reported a net loss of W11.1 billion ($10.6 million) in the third quarter, falling far behind market rival NHN that announced record-high sales and profit the day before. Daum's operating profit declined by 21 percent to W8.7 billion ($8.3 million), a result that is due to the increased marketing costs of online trading and expenses on its global units, including U.S.-based searching engine Lycos. The company, however, saw a decrease in its net loss from a year ago, when it posted a W13 billion ($12.4 million) loss. Its sales also went up slightly by W1 billion ($960,000) to W52 billion ($50 million) from the last quarter. When its 10 sister companies are included, Daum would have a net loss of W1.5 billion ($1.4 million) while its revenue slightly increased by 2 percent to W112 billion ($107.5 million), which the company ascribed to gains in subsidiaries such as Daum Onket, Daum Finance and Daum Direct 1 car insurance.

Mobile/Wireless

- LG Electronics revealed that it has no plans to join partner SK Telecom in investing in the companies' wireless venture in Vietnam. The comments were made after SK Telecom disclosed its plan to spend some $280 million boosting its stake in SLD Telecom PTE to 85 percent to compete in the Vietnam mobile market. Other shareholders including LG, which owns 44 percent of SLD may come up with decision by next month whether to increase investment. From 7.3 million this year, the number of mobile-phone users in Vietnam is seen as surging to 21.2 million by 2008. In a separate report, LG Telecom said it is supplying emoticon SMS solution and service to Cambodian mobile operator, Casacom (Cambodia Smart Communication). LG collaborates with feelingk, a wireless contents provider, in providing the services. LGT said that it integrated revenue sharing model in the contract with Casacom on Emoticon SMS. Casacom will set up hardware for the service and launch marketing campaign on the solution and service provided by LG Telecom. The service will be commercialized in mid December and Casacom will be the first mobile carrier in Cambodia offering Emoticon SMS.

Telecommunications

- Telecom provider Dacom announced the launching of its own T-banking service next year in partnership with Korea Post, Kookmin Bank, Kyongnam Bank, Industrial Bank of Korea, Daegu Bank and Busan Bank. Dacom follows Skylife, which has provided T-banking services in cooperation with SC First Bank since last May. C&M Communications, one of the multiple system operators (MSOs) in Korea, is also preparing to offer a T-banking service to cable TV subscribers.

China

Internet

- Internet advertising agencies Opt Inc. and Adways Co. will soon launch a net ad service in China for Japanese companies that sell consumer goods in the country or want to improve their local brand recognition. Opt will market the service to Japanese businesses, while Adways will procure slots for ads from China's major portal site operators, primarily, Baidu, Google and Yahoo China, three major search engines in China used by an estimated 75 percent of the country's Net users. Opt and Adways aim to win at least one contract per month from a Japanese firm in the near future. The Chinese unit of Adways will produce Chinese-language ads based on instructions from Opt in Japan.

- Tom Online Inc. announced a 77 percent increase in third-quarter profit from the same period last year, ascribing the growth to the rapid development of its core wireless internet service. Tom's net profit for the three months ending Sept. 30 was $12.9 million, up from $7.3 million in the same period last year.

- Shanda Interactive Entertainment Ltd posted net revenue of $61.7 million, a figure representing a 7.4 percent decline compared to the second quarter of 2005, a result that is due to a decrease in online game revenue. Shanda's net income in the third quarter amounted to $32.3 million, an increase of 17.1 percent quarter over quarter. Revenues from Massive Multiplayer Online RPGs (MMORPGs) in the third quarter went 23.3 percent year-over-year but went down 8.4 percent quarter-over-quarter to$40.9 million, accounting for 66.3percent of total revenues. The sequential decrease in revenues from MMORPGs was primarily due to a decline in revenue from Shanda's game Legend of Mir II, which decreased 33.5 percent quarter-over-quarter to $19.1 million. Shanda said it is preparing to launch a new console that will allow subscribers to access a wide range of internet services, from music and movies to gaming, through television sets.

Media, Entertainment and Gaming

- Shanghai Zhangjiang Hi-Tech Park has been transformed into the third base for China's online gaming and animated cartoon industry. The other two bases are located in Chengdu and Guangzhou. Some of the enterprises in the Shanghai Zhangjiang Software Park include large-scale multimedia enterprises like Shanda Interactive Entertainment Ltd. and Creative Technology. There are now more than 300 high technological enterprises and over 50 research and development organizations set up in the hi-tech park. It has won more than 600 patents.

Mobile/Wireless

- According to In-Stat, the 3G market in China has great promise but is also facing much uncertainty, which includes what the government will come up in terms of policies to rule high-speed wireless technology. The report says the number of mobile subscribers in China will reach nearly 610 million in 2009, with the percentage of 3G users ranging from 23 percent to 58 percent, depending on the different competitive scenarios and operator strategies. The research firm assumes that 3G licenses will be issued at the beginning of 2006. The scenario painted for the issuance of 3G licenses has China Unicom and China Netcom merging, with four licenses issued if no merger happens. W-CDMA technology will be the dominating 3G technologies in China while TD-SCDMA will show gradual growth over time. Voice will remain the dominating service for 3G in China, while mobile Internet access service is expected to be the fastest growing service.

Software

- IBM announced the completion of the first phase of its software-outsourcing base in China's Optical Valley in Wuhan. The first phase of the base is the software outsourcing management center for IBM's international purchasing department, which is also IBM's first software outsourcing center in China. At present, local companies such as Wuhan KM Soft and Wistron have received orders for software from the center. The second phase for the base will be a software factory with a budget investment of US$20 million.

Telecommunications

- China Netcom said it is discussing with firms that include Spanish telecommunications giant Telefonica to sell a strategic stake in its undersea cable carrier, Asia Netcom. Sources close to the talks identified Telefonica as having the inside track and said the Spanish firm had also discussed taking a controlling stake in Asia Netcom. Telefonica paid 240 million euros ($281.6 million) for a 3 percent stake in China Netcom's Hong Kong and United States-listed arm in July, and has since increased the stake to about 5 percent. Analysts are saying, however that Telefonica's interest in Asia Netcom has been complicated by its 17.7 billion pound ($30.8 billion) all-cash bid for British mobile operator O2. China Netcom's talks with Telefonica are therefore expected to drag on, creating potential opportunities for rival bidders. China Netcom has been reported to have also held talks about an Asia Netcom stake sale with an Indian company and Singapore Technologies Telemedia, which owns 61.5 percent of Asia Netcom's former parent, Global Crossing. China Netcom acquired 51 percent of Asia Netcom in 2002, and the remaining 49 percent a year later. Asia Netcom was later transferred to China Netcom's listing vehicle.

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