A week in tech

A round-up of all the latest tech news.

Japan

Internet

- Monex Beans Holdings and Matsui Securities, both online brokers, announced record-high group pretax profits for the first fiscal half ended September 30. The two firms attributed the results to stock rally between July and September as well as increases in interest income as a result of built-up margin trading. Monex Beans said its pretax profit posted a 115.7 percent increase to 8.5 billion yen ($73.5 million). The company said it will change the name of core brokerage unit Monex Beans Inc. to Monex Inc. Matsui Securities registered an 18.6 percent growth of its operating profit to 22.4 billion yen ($193.7 million) on the year. The firm said its pretax profit climbed 17.7 percent to 14 billion yen ($121.1 million).

- Excite Japan disclosed its plans to enter the online game business in Asia. The company said it plans to spend about 50 million yen ($432,500) to buy a stake of around 30 percent in Prima Intergame, a Malaysian company that is the exclusive supplier of foreign online game software to Chinese online game company Guangdong Digital Communication Network (GDCN), a subsidiary of China Telecommunications. Outside of the investment, Excite Japan said it will pay Prima about 100 million yen ($865,000) for the acquisition of the right to jointly supply to GDCN a large-scale multi-player role play game developed by a South Korean firm. Given the difficulty for new entrants to make a market entry, Excite sees wisdom in investing in an established company. As a strategy to recover funds, Excite said it would distribute games through new subsidiaries to be set up in Hong Kong and Mainland China.

Mobile/Wireless

- The government said it would require mobile phone companies to install global positioning technology in handsets sold from April 2007. The rule is aimed at aiding police or other authorities in automatically pinpointing the origin of emergency calls. With the legislation, companies will be required to use unified technology, with the Ministry of Internal Affairs and Communications amending related ordinances by the end of the year.

- NTT DoCoMo revealed the termination of its capital alliance with KPN Mobile, the result of their disagreement over cellular phone services in Germany. DoCoMo said it has sold its stake in KPN Mobile to the Dutch cell phone service provider's parent for about 680 million yen ($5.8 million). Even with the sale, DoCoMo said it has obtained the right to use KPN mobile's patents and internet access know-how, which DoCoMo considers to be more valuable than the price sale. The company roughly invested 408 billion yen ($3.5 billion) in KPN Mobile in 2000, with all the investment written off after the telecom bubble burst in Europe.

Hardware

- Sony posted a net profit of 28.5 billion yen ($246.2 million) for the second quarter of its financial year, a figure that represents a 46.5 percent decline from a year earlier. The company said restructuring charges amounting to 32.9 billion yen ($284.2 million) contributed to the decline. The company also left its full-year forecast unchanged at a net loss of 10 billion yen ($86.4 million). Sony said its group sales were flat at 1.7 trillion yen ($14.6 billion) in the second quarter. For the six months to September, Sony posted a net profit of 21.2 billion yen ($183.1 million), which is 72 percent down from a year earlier. The group posted a net loss of 7.3 billion yen ($63 million) in the first quarter, with observers noting Sony as having fallen behind rivals in the lucrative TV sector. Sony said its operating profit in the three months to September climbed 52 percent to 65.9 billion yen ($569.4 million).

Semiconductors

- Elpida Memory Inc., Japan's only exclusive maker of dynamic random access memory, or DRAM chips, posted a group net loss of 3 billion yen ($26 million) for the July-September quarter, compared with its year-earlier profit of 4.2 billion yen ($36.3 million). The company reported a group operating loss of 2.5 billion yen ($21.6 million), compared with a year-earlier profit of 5.2 billion yen ($45 million). Its group sales posted a 5.2 percent growth to 57.4 billion yen ($496.6 million) from 54.6 billion yen ($472.3 million). For the year through March 2006, Elpida is projecting a group net profit in a range of 5 billion yen ($43.2 million) to 10 billion yen ($86.5 million).

Korea

Internet

- The country's Fair Trade Commission stated that it would not terminate its investigation into allegations that Microsoft engaged in unfair trade practices even if the software giant settles for an accord with Daum Communications, the Korean company that first raised the complaint. In its complaint, Daum alleged that Microsoft violated trade rules by trying its instant messenger software to Windows. Korea can order the separation of bundled software if Microsoft is found to have engaged in unfair trade practices in South Korea. Microsoft officials said they might take the case to court if the commission rules against the company.

- The Bank of Korea (BOK) said that 30.9 percent of retail banking transactions was done over the internet in the third quarter, with tellers handling 29.8 percent of transactions. The report said, on average, the number of transactions processed on the nternet was 11.2 million a day in the third quarter, up 8.2 percent from the previous quarter. The result shows the first time that the number of internet banking users surpassed that of bank users since the service debuted in July 1999. The BOK said the number of customers who registered for internet banking services was 25.4 million as of the end of September, a figure that is 11 percent up from the 22.9 million at the end of June.

Mobile/Wireless

- SK Earthlink announced the changing of its name to Helio, a new mobile brand custom built for the young and tech-savvy consumers' market. The firm is a joint venture between SK Telecom, a wireless carrier, and EarthLink, the country's next-generation ISP. Helio said it is leveraging research and development innovation from SK Telecom to create a pipeline of proven service platforms; systems and applications that the company said will be two or more years ahead of the U.S. market.

- KT said it is thinking of restructuring its customer relationship management (CRM) systems for its 20 million subscribers, with the aim of improving its services that converges wire/wireless and WiBro services. KT said that it is drafting the next-generation CRM strategy project with IBM Korea's Business Consulting Services Division. Based on the results of the consulting initiative, KT is going to decide whether or not to install new CRM systems. KT said it is currently working on a consulting project with Accenture for installing the next-generation integrated customer information system.

- According to a recent survey made by the National Internet Development Agency, 73.1 percent and 42.7 percent of users in ages 20s and 30s showed they are using wireless internet service, which is a 10.4 percent and 8.5 percent increase from last year, respectively. Mobile phone users in 20s and 30s appeared to use wireless internet service for 58.1 minutes and 49.4 minutes per week on an average, respectively. This is the longest among time users. As of September this year, the ratio of using wireless internet service by total mobile phone users went up 2.6 percent to 42.8 percent from the same period of a year ago, with the ratio of men users by 42.7 percent and women users by 42.9 percent. Of the total wireless Internet service users, 96.8 percent, 45.4 percent, 42.1 percent and 37.1 percent are using the service to download ring back tones, listen to music, use education content and e-books, and to play games, respectively.

- Samsung Electronics said it plans to transform 4G phones into interpreters and portable doctor. Acting as a simultaneous interpreter, the 4G device is expected to break down communications barriers by providing translation and interpretation functions. In a separate report, Samsung said it is releasing the country's first Bluetooth smart phone, the SCH-M600. The device is a PDA with an internal Bluetooth antenna, which uses the WIPI platform SK Telecom and runs on Microsoft operating system for mobile phones. The phone has software applications such as Word, Excel and Outlook.

- Eonex Technologies, a South Korean technology start-up, said it has developed a mobile phone with LG Electronics using its homegrown semiconductors for cellular phones. This development is expected to reduce the market dominance of US wireless chipmaker Qualcomm whose semiconductors dominate as the core components running on CDMA technology. Qualcomm holds key patents on the CDMA technology and earns some of its profits through royalties collected from handset manufacturers such as Samsung Electronics and LG Electronics. At present, the country's mobile phone makers spend some 3 trillion won ($2.8 billion) a year buying chip sets from Qualcomm.

Telecommunications

- SK Telecom announced a 49 percent rise in its third-quarter profit to 561 billion won ($534.6 million) for the July-September period, compared with the 396 billion won ($377.4 million) it posted a year ago. The growth is ascribed by the company to a substantial gain in wireless data revenues. The third-quarter net profit is seen as due also to a 177.5 billion won ($169.1 million) gain made after the company sold a 60 percent stake in its handset manufacturing subsidiary SK Teletech Co. to the Pantech Group. Revenue from the data business, which accounts for almost 25 percent of SK Telecom's total revenues, climbed 39 percent to 653 billion won ($622.3 million). SK Telecom also disclosed the breakdown in its negotiations with an Indian telecommunications firm, citing differences over terms even as it describes the Indian telecoms market as attractive and full of potentials.

China

Internet

- Two major fixed-line telecommunications operators in the mainland are formally initiating their IPTV offering as they move from pilot schemes to charging their customers. China Telecom is said to be charging 60 yuan ($7) a month as early as next month for its value-added service; China Network Communications Group Corp (Netcom) has reportedly signed up 30,000 customers in Harbin at between 60 yuan ($7) and 80 yuan ($10) a month for more than 50 channels. China Telecom said that IPTV trials had expanded to seven provinces from the five announced by its top official, with the company planning to share up to 50 percent of content revenue with its partner Shanghai Media Group (SMG), which remains the country's only IPTV licensee. Analysts are saying that IPTV could start contributing to China Telecom earnings three to four years after launch and could be the fixed-line operators's medium-term growth driver after its 3G mobile business. Netcom's IPTV division in Hangzhou said that, unlike China Telecom, its decoders provide interactive and on-demand programming. For its users, a monthly tariff of 24 yuan ($3) would give them 63 channels, including satellite channels from other provinces and CCTV.

- Google announced the hiring of a sales veteran, Johnny Chou, to lead the company's marketing strategy in China, with the task of setting up the sales and business development operations in Greater China. Chou was coming from UT Starcom where he was president of the company's China operations for nine years. He will be working with Lee Kaifu, a former Microsoft executive and whose task is to establish a Google research center in China. Google said the center is its way to demonstrating its commitment to tap Chinese talent as well as its aim of forming alliances with universities and institutes in the country.

- Ctrip International, a leading hotel accommodations and airline tickets services provider in China, announced that the firm approved a plan to distribute 30 percent of its net profit in 2005. The move marks the second time that the firm has proposed dividend distribution. Ctrip posted net revenue of $16.6 million in the second quarter of 2005, a 33 percent increase quarter over quarter.

- According to iResearch Consulting Group, online advertising in China maintained its momentum of strong development in the third quarter of 2005. Online advertising saw an 11.2 percent quarter-on-quarter growth and a 24.9 percent rise over the same period the previous year. The growth in online advertising has been ascribed to the growth in three industries: Internet services, IT products and real estate. The real estate industry spent some 116 million yuan ($14.3 million) on online advertising; online ad revenue from Internet services amounted to 114 million yuan ($14 million).

Media, Entertainment and Gaming

- Square Enix, a Japanese game developer, said it would launch a brand new online game online called "World of Mana" in the Chinese market. The move is seen by analysts as an indication that overseas gaming giants are starting to venture into the Chinese online gaming market, which promises to be the largest gaming market in Asia. China's online gaming market is valued at 2.4 billion yuan ($296.8 million), a 47.9 percent increase over the previous year. Square Enix established its wholly owned subsidiary Square Enix (China). In Beijing in 2005. It specializes in digital interactive entertainment products with interests in China and other Asian countries.

Mobile/Wireless

- China demonstrates that, as the world's biggest mobile phone market, it is still growing: at the end of September, it has registered 377 million phone subscribers, according to the Ministry of Information Industry. The figure means an average of 29 mobile phones for every 100 people, according to government data. The growth corresponds to a 40.2 percent growth in the number of short text messages sent via mobile devices from a year earlier to 218.5 billion. Even as mobile phone users outnumber them, the number of fixed-line telephones went up to 435 million by the end of September, the same report said.

- China Unicom announced a 7.4 percent decline in its profits for the first nine months of the year from the same period last year, a result it ascribes to a 4.5 billion yuan ($556.5 million) amortization expense for subsidizing handsets for its CDMA service. China's second-largest mobile phone company said net profit for January to September was 3.8 billion yuan ($470 million), compared with 4.1 billion yuan ($505 million) during the same period last year. The company said its revenues posted an almost 11 percent increase to 65.3 billion yuan ($8 billion). As of the end of September, Unicom registered 124 million subscribers.

Hardware

- Leading personal computer manufacturer HP announced the launching of new production line in Pudong Jinqiao, Shanghai. The new line is expected to double the firm's production capacity of PCs in China. Through economies of scale, the firm expects is looking to the lowering of PCs manufacturing costs.

Semiconductors

- Semiconductor Manufacturing International Corp. (SMIC) announced a decline in its net loss for the third quarter to $26 million from the $40 million in the previous quarter, a performance its ascribes partly to rising prices. China's biggest manufacturer of made-to-order chips said its revenue for the nine months to September 30 was $310 million, compared with $274.9 million in third-quarter sales last year. SMIC said sales were pushed up by an increase in average prices to $842 per eight-inch wafer by the end of September from $807 at the end of June.

Telecommunications

- China Netcom Group Corp (Hong Kong) announced the approval of its shareholders of a plan to acquire the telecommunications assets of Heilongjian, Jilin, Shanxia and Inner Mongolia from their parent company. Valued at 12.8 billion yuan ($1.5 billion), the deal brings the number of Netcom's franchise areas to 12. China Netcom said it would pay 9.8 billion yuan ($1.2 billion) of the total through a five-year loan from the parent firm.

Taiwan

Mobile/Wireless

- The Taiwan government announced its financial and political support of the development of the WiMAX communications standard in the country. The country's economics ministry promised NT$1.1 billion ($32.7 million) for WiMAX development projects next year alone. The ministry said at least NT$7 billion ($208.4 million) out of a total NT$37 billion ($1.1 billion) in funding for "Mobile Taiwan" (M-Taiwan) project will be earmarked for WiMAX research and development. Initiated at the beginning of the year, the M-Taiwan project is aimed at increasing mobile infrastructure and technology and assisting IT manufacturers get a head start in the development of equipment for export. The government also pledged to facilitate the process of radio spectrum allocation, a crucial step in ensuring WiMAX is allowed to be deployed.

Semiconductors

- Taiwan Semiconductor Manufacturing Co (TSMC), the world's biggest contract microchip maker, reported a 12.3 percent decline it its net profit to NT$24.4 billion ($726.7 million) from a year earlier. The firm said net profit for the nine months to September went down to NT$59.6 billion ($1.7 billion) from NT$70.1 billion ($2 billion) as sales declined from NT$192.1 billion ($5.7 billion) to NT$183.4 billion ($5.4 billion). TSMC said it expects to generate revenue between NT$77 billion ($2.2 billion) and NT$79 billion ($2.3 billion) in the fourth quarter to December.

Hardware

- Acer announced a 66.6 percent increase in its net profit in the nine months to September, attributing the growth to rising sales in the US and the greater China area. The Taiwan-based firm said that during the same period, its net profit was NT$6.3 billion ($187.6 million), compared with NT$3.8 billion ($113.1 million) a year earlier.

- BenQ of Taiwan posted a 53 percent decline in its third-quarter operating loss from the previous quarter to NT$300 million ($9 million), ascribing the result to strong sales of flat-panel monitors, on one hand, and continued declines it its handset business on the other. The company said its sales growth went up 15 percent to NT$34 billion ($1 million). Its net profit saw a 98.6 percent decline to NT$18 million ($536,000) from the NT$1.3 billion ($38.7 million) a year ago. BenQ's gains on foreign exchange helped it achieve non-operating income of NT$390 million ($11.6 million). The company expects mobile phone sales to account for 7 percent of its sales given the acquisition of the handset business of Siemens that will give rise to a merged unit to be called BenQMobile. An official of the merged unit said the merger of the two would yield economies of scale that should turn a profit for the two companies. BenQ manufactures monitors, notebook personal computers, projector and mobile phones.

Hong Kong

Internet

- Asia Netcom announced its $35 million investment on an undersea cable linking South Korea with Qingdao in Shandong province, a move that responds to what the company sees as the end in the Asian bandwidth glut. The company owns a cable linking Japan, Korea, Taiwan, Hong Kong, the Philippines and Singapore. The 350-km Korea-Qingdao extension would have a capacity of 40 gigabytes and is expected to speed up the internet traffic between Korea and Beijing by 70 percent. China Netcom said broadband expansion in the mainland next year would be driven by bandwidth-consuming new applications such as IPTV, high-definition television and 3G multimedia services.

Media, Entertainment and Gaming

- Sunwah Media Holdings and Japanese firms Kadokawa Holdings announced the establishment of a joint venture to open cinema complexes in the main Chinese cities with an initial investment of HK$100 million ($12.8 million). Under the agreement, Sunwah will possess 55 percent of the joint venture's equity while Kadokawa will own the rest. The joint venture is looking to building 20 cinema complexes in China within the next three years. Kadokawa has other involvements in publishing general books, comics and multimedia games.

Mobile/Wireless

- New World acknowledged it was indeed looking into a possible integration of its network with another Hong Kong operator. The move by Telstra to merge its Hong Kong-based mobile-phone unit CSL is aimed at halting a slide in its profit. Rumoured as possible merger partners include New World Mobile Holdings, with 1.3 million customers.

Information Technology

- Octopus Cards announced the revamping of its corporate structure, a move that is seen as preparing the way for its eventual separate listing. The company has been allowed by its five shareholders to separate its payment and non-payment operations. Octopus said the move would allow the better management of its growing consultancy services overseas, classified as non-payment, while its core payment services would continue to be under the regulation of the Hong Kong Monetary Authority. The corporate restructuring resulted in the formation of a holding company set up between Octopus and its shareholders. Octopus Cards issues the city's most popular smart cards, which is used mainly for paying public transport fares.

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