Japan
Internet
- British telecommunications company Cable & Wireless PLC is selling its Japanese business to Tokyo-based broadband service provider Softbank Corp. for 12.3 billion yen ($115 million). The deal announced for Cable & Wireless IDC Inc., a provider of voice, data and Internet services to business customers in Japan, includes additional debts of 1.9 billion yen ($18 million). Softbank said Cable & Wireless IDC would become a subsidiary of Softbank to strengthen its international telecommunications operations in its bid to become a leading broadband company. Softbank has become more aggressive in recent years, as it seeks to challenge Nippon Telegraph and Telephone Corp., a former government monopoly. In May, Softbank announced it was buying Japan's third largest telecom, Japan Telecom Co. to acquire its corporate customers and optical fiber network.
- The Nov. 30 debut of E*Trade Securities on the JASDAQ market is drawing attention as the largest IPO this year. The online brokerage is expected to raise slightly more than 20 billion yen ($188.7 million). This exceeds the roughly 10 billion yen ($94.4 million) raised by Sosei Co. when it listed on the Mothers market in July.
- UFJ Bank plans to form a brokerage partnership with kabu.com Securities Co. in what will be the first alliance between a major bank and an online brokerage. The banking unit of UFJ Holdings Inc. will link its system with kabu.com's so that users assessing the bank's web site can make securities transactions online, including opening accounts, trading shares and settling accounts. Starting next spring, UFJ bank and kabu.com will first focus on improving customer convenience. Customers with accounts at UFJ Bank will be able to immediately open securities and trade shares. Through this alliance, kabu.com hopes to tap the funds of UFJ Bank depositors, while UFJ Bank believes that it will enable it to expand its product lineup without having to spend too much to train employees for securities trading.
- Index Corp. and eBank have agreed to join forces in the field of cellular phone Internet sites. Index, a content provider for Net-capable cell phones, hopes the partnership will strengthen its finance-related services. For example, the company is considering introducing bank's online payment know-how to its cell phone web sites to make them more attractive to handset users. It also hopes the tie-up with eBank will generate orders from financial institutions seeking support in managing their cell phone websites. For starters, Index will oversee eBank's official site and improve its user convenience by reducing the number of steps needed to navigate. If eBank decides to add services, such as marketing investment trusts and foreign- currency deposits, Index will lend a hand in system development. In addition, the companies are in talks to have Index take a stake in eBank. This will likely be achieved by buying around half the roughly 10% interest that Livedoor Co., a major Internet-related service company holds in eBank.
Software
- YE Data Inc. has started marketing software that can easily recover e-mail messages deleted from personal computers, projecting sales of 50 million yen $472,000) over the next year. The software is a Japanese-language version of PowerControls Ver. 3.0, the latest mailbox recovery software developed by Krool Ontrack Inc., a U.S. data recovery service company. It is compatible with Microsoft Exchange Server of Microsoft Corp. and, unlike the previous version, with IBM Tivoli Storage Manager, backup software made by IBM Corp. The software features enhanced security functions and easy operation. It costs 169,800 yen ($1,600) for a corporate license when used by 100 people or less.
- Fujitsu Ltd. Announced an operating profit of 33.2 billion yen ($312 million) and pretax profit of 4 billion yen ($38 million) for the six- month period through September, the first time it has posted a half-term profit in both categories in four years. The software service division, one of the company's key cash cows, saw its operating profit plunge by a little more than 13.3 billion yen ($125 million) year on year to 15.5 billion yen ($146 million). Its profit for all of fiscal 2004 will likely be 15 billion yen ($141 million) less than projected and is now estimated at 155 billion yen ($1.4 billion). The profit fall was made up for by the strong earnings performance of the electronics device and other divisions in the first half. Systems integration is the mainstay activity of the software service division. The company has already provided on its books for some 60 billion yen ($56.4 million) worth of systems integration projects slated for completion by 2005, on which it is certain to lose money. Losses from unprofitable projects and other factors totaled an estimated 15 billion yen ($141 million) in the first half, which depressed the division's operating profit. Such losses might total 20 billion yen ($188 million) for the entire year. The company stands by its projection of 200 billion yen ($1.8 billion) in operating profit for fiscal 2004, even while lowering the sales estimate by 50 billion yen ($470 million) to 4.9 trillion yen ($46 billion).
Mobile/Wireless
- NTT DoCoMo reported lower profits for the interim period as revenue for mobile phone operations slipped after it discounted service fees amid cutthroat price competition in the Japanese market. The mobile phone unit of telecommunications giant Nippon Telegraph & Telephone Corp. said its group net profit for the six months ended Sept. 30 dropped 6.0 percent to 335.2 billion yen ($3.2 billion) from 356.4 billion yen ($3.3 billion) a year earlier. Its group operating profit fell 7.6 percent to 545.4 billion yen ($5.1 billion), while its group revenue declined 3.3 percent to 2.45 trillion yen ($23 billion) from 2.54 trillion yen ($23.9 billion). The company trimmed its full-year group revenue target to 4.8 trillion yen ($45.4 billion) from 4.9 trillion yen ($46.4 billion), citing a likely decline in new handset sales and phone service revenues. But it maintained its group operating profit forecast at 830 billion yen ($7.8 billion), saying it will seek to cut operational costs further. This fiscal year, DoCoMo is focusing on its third-generation business and value-added multimedia services such as cyber-money services using non-contact integrated-circuit chips embedded in phones. The number of users of its "FOMA" third-generation mobile phone service has been growing steadily, the company said. Subscriptions to the service increased 6.5 million at the end of September from 3.1 million at the end of March.
- NEC said it aims to turn its cellular phone operations profitable again in fiscal 2005 by improving its product development efficiency. As part of the effort, the company plans to stop designing and developing chipsets for overseas model third-generation cell phones and start buying them from outside firms. Chipsets are core cell phone components consisting of semiconductors and software. The company also plans to start using Linux operating system in its cell phone development to boost efficiency. And to speed up the commercialization process, the firm aims to transform its R&D efforts from a model-based structure to one focused on functionality. NEC had projected that the operating profit from its cell phone operations would total 40 billion yen ($376.9 million) for fiscal 2004, but it now foresees an operating loss of about 20 billion yen ($188.4 million). It cited a sluggish market and delays in releasing new products overseas as the major reasons for the business downturn.
Telecommunications
- KDDI Corp. said its group net profit for the fiscal first half fell despite stronger revenue as it booked a special loss on the value of some of its fixed assets due to its introduction of asset impairment accounting rules. Japan's No. 2 telecommunications carrier posted a group net profit of 77.8 billion yen ($726.7 million) for the first half ended Sept. 30, down 9.3 percent from 85.9 billion yen ($801.7 million) in the same period last year. KDDI said its net balance was squeezed by 20.2 billion yen ($188.7 million) in valuation losses for its unused assets such as submarine telecommunications fiber optic cables. KDDI's mainline operations otherwise remained solid thanks to the continued growth of its "au" mobile phone services. Its fixed-line division continued to struggle. Group revenue rose 6.1 percent to 1.5 trillion yen ($13.8 billion) from 1.4 trillion yen ($13.1 billion) in the same period a year ago, while operating profit grew 2.7 percent to 162.4 billion yen ($1.5 billion). The company maintained its group revenue outlook at 2.9 trillion yen ($27.3 billion) and left its pretax profit estimate unchanged at 300 billion yen ($2.8 billion).
Media, Entertainment and Gaming
- Japan CableCast Inc., a distributor of digital television programs to cable TV firms, intends to double the number of stations that receive its services to 60 by the end of next March. The wholly owned subsidiary of communications satellite operator JSAT Corp. started the JC-Hits distribution service in February. It receives movie, music, drama and other TV programs from content suppliers and converts them into digital data for transmission to cable TV stations via satellite. In all, it offers about 60 channels. With the spread of flat-panel TVs, demand for high-definition digital broadcasts is rapidly increasing. Cable TV stations can reduce capital investment and personnel costs by purchasing digitized programs from distribution services.
- Hong Kong-based news and financial information service Xinhua Finance ended 7 percent below its offering price on its volatile first day of Tokyo trading. Xinhua Finance, listed on the Tokyo Stock Exchange's Mother's market for start-ups, becomes the first non-listed overseas company to trade in Japan. It issued 20,000 shares in public offering and raised around 3 billion yen ($28 million). The company said it plans to use the money for strategic acquisitions and running costs. Its shares closed at their opening price of 163,000 yen ($1,534), 7 percent below its IPO price of 175,000 yen ($1,647). The shares rose as high as 186,000 yen ($1,750), but fell to 162,00 yen ($1,524) by midday. For the six months ended June 30, the company posted net loss of $4.3 million on sales of $17.9 million. For calendar 2004, the company projects net loss of 1.1 billion yen ($9 million) on sales of 6.1 billion yen ($55 million). Established in 1999, Xinhua Finance distributes financial news on more than 2000 Chinese firms, assigns credit ratings, and calculates indexes for Chinese stocks and bonds. The company is a joint venture between official Chinese news agency unit Xinhua Financial Holdings and other US and Japanese investors.
Korea
Internet
- A battle to take control of Korea Thrunet intensified after LG Group's telecommunications arms suspended their next-generation mobile internet business to focus on broadband services instead. The country's second-largest conglomerate said its three affiliates - Dacom, mobile phone operator LG Telecom and cable operator Powercomm - would put on hold their joint plan to launch mobile internet services. Instead, they would work together to buy Thrunet, the country's third-largest broadband internet provider. Dacom has competed with Hanaro Telecom, the country's No. 2 broadband Internet operator, to acquire Thrunet which both regard as crucial to their fight against market leader KT Corp. Thrunet with 1.2 million subscribers, or 11 percent of the market, has been up for sale since it sought court protection in March last year. Its first tender last year failed because of low bid prices. Creditors plan to receive new bidding proposals by December. South Korea is the world's most concentrated market for high-speed internet connections but recently broadband service providers have been hit by slow growth, saturation in the market and weak consumption caused by economic downturn.
- South Korean prosecutors said they have launched an investigation into the country's first internet banking fraud that uses a technique known as "phishing." The investigation follows a recent detection that some customers of a foreign bank here have been victimized by internet fraud via a copycat web site. Phishing, or a combination of private data and fishing, is a relatively new breed of internet-based financial scam that obtains bank or credit card information by luring anonymous Internet users through e-mails to web sites that imitate the financial companies' real sites.
Mobile/Wireless
- KTF Co., the country's second-largest mobile phone operator, said it would enter into a joint venture with three partners to sell mobile phone content in Indonesia. KTF will take a 19.9 percent take in the Indonesia-based venture by investing $2.2 million, the company said in a statement to the Korea Stock Exchange
- South Korean mobile phone content market is expected to grow at 28.2 percent a year to 6.6 trillion won ($5.8 billion) by 2008, according to IDC. While the nation's saturated market condition has faced mobile phone operators with slower growth, the cell-phone content market which includes ring tones and music-downloading services, will see high growth over the next few years, the report by the research group said.
Semiconductors
- Hynix Semiconductor Inc., the world's second-largest maker of memory chips, said net income for the third-quarter nearly quadrupled thanks to strong chip sales. In the three months to Sept. 30, net income excluding contributions from overseas affiliates jumped 3.9 times to 530 billion won ($466 million) from 134 billion won ($119.9 million) a year ago, the company said in a statement to the Korea Stock Exchange.
Hardware
- Technology giant Samsung Electronics said it is aiming to earn $25 billion from annual sales in China in 2010. In a fund-raising campaign in Shanghai, Samsung officials said the company also plans to increase the ratio of Chinese revenue to total sales to between 25 percent and 30 percent by 2010, up from the current 18 percent.
China
Internet
- Chinese Internet company Sohu.com Inc suffered from the suspension of its multimedia messaging service and saw a sharp decline in its wireless revenues in the third quarter, while its online advertising business line benefited from sports events. Sohu said that its revenues in the past quarter were $25.9 million, 5 percent less than the previous quarter's $27.3 million, but 17 percent higher than the same period last year. Net profits were $8.3 million compared with $9.9 million. Sohu's non-advertising business, mainly including wireless value-added services, declined by a quarter to $10.5 million over the previous quarter. The company's multimedia messaging service, which allows users to send pictures to mobile phone users, was suspended in August by the country's dominant mobile carrier China Mobile for a year. Despite Sohu's progress in advertising, it still faces huge pressures from Sina, the biggest online advertising company in China. With wireless revenues declining, too much reliance on advertising may not be good for the company, an official said. Sohu also announced the expansion of its stock repurchase plan, initiated in August.
- Shares of Tom Online Inc. dived after the Chinese wireless services provider warned that its third-quarter revenue would fall short of Wall Street expectations. The company also advised its shareholders to "exercise caution in trading its stock" because of recent price volatility, and said it was unaware of any reason for the fluctuation. Tom Online' shares sank to $11.11 from a high of $12.99 over the past two weeks, but surged 16 percent on upbeat earnings from rival Sina Corp. Citing lower-than-anticipated sales in its interactive voice response services division, Tom Online said it expects to post revenue of $28 million to $32 million when it releases its quarterly report in November. That compares with previous views for growth of 10 percent to 15 percent from revenue of $30.9 million in the prior-year quarter.
- Shares of Sina Corp. rose more than 21 percent in after-hours trading after the Internet services company reported a 24 percent jump in third-quarter earnings on higher revenue from advertising and mobile-related services. Beijing-based Sina reported net income of $14.5 million compared with $11.7 million. Sales were $52.5 million, up from $31.9 million. The company easily beat the estimate by analysts surveyed by Thomson First Call for earnings per share of $0.28 cents on sales of $49 million. The company said gross margin was 67.9 percent, down from 70 percent last year. Advertising revenue rose 61.8 percent to $18.5 million. Other revenue increased 66 percent to $34 million; it includes fees for services such as sending short messages via mobile devices. Total sales for mobile value-added services were $31.3 million, up $18.1 million last year. Sina forecast fourth-quarter revenue of $54.5 million to $55.5 million and income, excluding items, of $18.5 million.
- Voice over Internet protocol (VoIP) was unlikely to take off in China soon, as the government was keen to protect fixed-line revenue for telecommunications companies, analysts said. Mainland Internet service providers are talking with fixed-line carriers about offering personal computer-to-fixed line telephony services and VoIP technology is gradually making inroads -even if regulations fail to keep pace. An unnamed government was early quoted saying that initial regulations on VoIP would be released soon, and that the Ministry of Information Industry would classify the new technology as a value-added service rather than a basic service. Value-added services are open to foreign investment and are subject to less rigorous licensing procedures than basic services such as fixed-line and wireless telephony. China Telecom, China Mobile and China Unicom are already offering domestic and international long-distance VoIP telecommunications services, usually in prepaid form. These are regulated as basic services and operate under long-distance licenses. The Internet component of these services is hidden from consumer, who accesses them through a standard telephone handset and not a PC. If PC telephony services for intra-provincial calls were legitimized they would vie for a key revenue source of fixed-line carriers.
- CNET plans to invest $10 million in China IT portal Ccidnet, according to an unnamed source quoted by China Computers World. Negotiations between the two parties are ongoing. According to insiders, CNET originally proposed to take over the site completely, but negotiations broke down. After CNET acquired ZOL and Fengniao for a total of US$16 million, several IT sites, including PCHome, PConline, eNet and Beareyes, have been rumored to be the next CNET acquisition target. Only eNet has denied the rumor. Ccidnet is a subsidiary of CCID Group, which is under the direct control of the Ministry of Information Industry (MII).
Telecommunications
- China Netcom Group Corp (Hong Kong) Ltd., China's second largest fixed-line phone company plans to raise as much as HK$9.4 billion ($1.2 billion) in an initial public offering to expand its networks and repay debt. Netcom is offering 47 million American depository receipts, each worth 20 common shares, at between $20.24 and $23.12 each, according to a filing with the U.S. regulator. A total of 1 billion shares, or 16.2 percent of the company, will be sold. The price is between 8.3 times and 9.4 times the company's forecast of 6.5 billion yuan ($785 million). Fund managers said Netcom is trying to lure investors with higher dividends and a lower valuation than its larger rival China Telecom Corp. China Netcom may sell an additional 156.9 million shares if demand warrants, putting the sale as much as $1.4 billion. CICC, Citigroup and Goldman Sachs Group are arranging the sale.
- An exclusive group of investors stands to make $189 million, or almost 60 percent profit, from a three-year investment in the mainland's telecommunications industry. The figure was revealed in the latest listing details filed by China Netcom Group Corp (Hong Kong) for its $1 billion to $1.2 billion dual offering in Hong Kong and New York. Through the CNC Fund, the group of foreign investors holds 445.5 million shares in the listing candidate after swapping their 12 percent stake in the previous Internet protocol-backbone carrier China Netcom Corp - better known as Little Netcom. The shares are worth between $450 million and$514 million, based on the offer price range of Netcom's initial share offering.
Media, Entertainment and Gaming
- Beijing Cable TV network operator Beijing Gehua CATV Network (BGCTV) released its January to September and third-quarter financial reports. From January to September, BGCTV had 486 million yuan ($50.7 million) in core business revenues, up 13.9 percent from the same period in 2003. Net profit was 130 million yuan ($15.7 million), up 19.3 percent. For the third quarter, BGCTV's core business revenues were 177 million yuan ($21.4 million). Net profit decreased 11.4 percent from Q3 2003 to 50.6 million yuan ($6.1 million).
- Shanda Interactive Entertainment Limited announced that the underwriters of its recent zero coupon senior convertible notes offering have exercised their option to purchase an additional $75 million in aggregate principal amount of notes. In October, Shanda priced its initial offering of $200 million in aggregate principal zero coupon senior convertible notes. The notes will mature on October 14, 2014, and will not accrue interest unless specified defaults under a registration rights agreement between the company and the initial purchaser occur. The notes will be redeemable by Shanda on or after October 15, 2007. In addition, pursuant to repurchase agreement between Shanda and SB Asia Infrastructure Fund L.P., or SAIF, Shanda will use $75 million of the total $275 million proceeds from the convertible notes offering to purchase shares from SAIF. This purchase price represents an ADS purchase price of $28.16 each, which is equal to 94 percent of the $29.96 reference price of the convertible notes offering. Shanda intends to retire the ordinary shares purchased from SAIF.
- Rainbow Group, China's largest color TV picture tube manufacturer, will list in Hong Kong by the end of 2004. The company plans to raise US$100 million form the IPO. Rainbow Group's underwriter is China International Capital Corporation (CICC). Rainbow Group is expected to have net profit of 380 million yuan ($46 million) in 2004. Rainbow Group has 20 percent of the picture tube market share in China; its clients include Konka, TCL, Skyworth and Hisense.
- China Entrepreneur is keeping the rumor mills busy with its latest article quoting an insider saying Yahoo!'s acquisition of Sina has met policy obstacles. Sina's influence in China's online media is similar to that of CCTV, so the Chinese government could not allow Sina to come under foreign control. An unnamed source said that Sina has actively pursued merger negotiations with competitor Netease. Although a Netease official privately said that the negotiations have stopped, insiders said that the negotiations are ongoing. According to China Entrepreneur, even Shanda and Tencent officials have are considering the possibility of acquiring Sina.
Semiconductors
- Grace Semiconductor Manufacturing Corp. said it is in the final stages of negotiating a technology transfer for a 0.13-micron manufacturing process from a US-based integrated device manufacturer. If brought about, a deal bringing advanced process technology from the U.S. would signal the further erosion of a post Cold War-era pact - known as Wassenaar Arrangement - set up to limit the dissemination of technology that could have potential military use. Until now, Grace has mostly relied on Japanese partners for its process technology, which ranges from 0.15-micron to 0.5-micron design rules. One of the next key hurdles for Grace will be its IPO. If it wants to expand beyond its full capacity of 35,000 wafers per month, a target it will hit in the first half of the year, then it will need to raise funds. The company recently said it would target a $700 million to $1 billion IPO placement in Hong Kong and on the NASDAQ. Before that, it may need to raise $50 million to $200 million through investors and further bank loans.
Taiwan
Semiconductors
- United Microelectronics Corp., the world's second-largest supplier of made-to-order semiconductors, reported third-quarter profit grew at the slowest pace in more than a year as customers moved to reduce inventories. Net income rose 160 percent to NT$10.9 billion ($324 million), from NT$4.2 billion ($126 million) a year earlier. Profit rose at the slowest pace in five quarters and fell 14 percent from the previous quarter. United Microelectronics followed bigger competitor Taiwan Semiconductor Manufacturing Co. in reporting slower profit growth as customer such as Texas Instruments buy fewer chips from outside suppliers. United Microelectronics said capacity utilization will fall 70 percent in the fourth quarter from 94 percent in the third, making it less profitable. The company was expected to post third-quarter net incomeof NT$10.8 billion ($323.5 million), according to the median estimate of seven analysts surveyed by Bloomberg News.
- ChipMOS Technologies (Bermuda) LTD. announced its intention to offer approximately $850 million in convertible senior notes due 2009, subject to entering into a purchase agreement with the initial purchasers and subject to market and other conditions. The notes will be convertible into common shares of the company and are expected to mature in five years, subject to exercise in the issuer's call option or holder's put option. The conversion rate, interest rate and offering price are to be determined. The net proceeds of the offering will be used to fund capital expenditures and repay certain payables related to its operations in Mainland China and for general corporate purposes. ChipMOS is a leading independent provider of semiconductor testing and assembly services to customers in Taiwan, Japan and the US, with advanced facilities in Southern Taiwan Science Parks, Hsinchu and Shanghai.
Hong Kong
Mobile/Wireless
- With the adoption of 3G mobile services in Hong Kong picking up pace after launch of better price schemes and handsets, the medium may provide the advantage developers need to enter the lucrative mainland market. The mobile penetration rate in Hong Kong is one of the highest in the world, according to an official of the Wireless Technology Industry Association. China is huge in network games. Chinese companies are looking at extending these games to mobile devices. Mobile game development in Hong Kong is ahead of the game with the right tools. The mainland has yet to adopt 3G. Analysts say it is good time for Hong Kong to develop a good business model and become part of the market there. According to the official, there is no standard for business collaboration as seen in Japan and Korea, where the mobile market is more established and the mobile content market more developed than in Hong Kong.
Internet
- Online travel portals are targeting small and medium-sized enterprises that frequently send staff to mainland on business trips but are unable to secure large discounts on airfare and lodging available to big corporations. Zuji Hong Kong has been approaching transport companies and hotels in second-tier mainland cities to win discounted bookings on the behalf of its customers. The company, which has been in operation for two years, was looking to line up deals on train fares and hotels to serve the needs of small and medium-sized business. According to Zuji, its mainland hotel network covers 50 cities. However, the choices are limited. The company is hoping to gain access to additional hotels.
Information Technology
- Paris-listed information technology services giant Atos Origin has expanded operations to Hong Kong as part of a strategy to double global revenues within two years. The company opened a data center in Chai Wan as well as a mirror site in the New Territories. The official IT services provider of the Beijing Olympics has data centers throughout Asia-Pacific region, including Malaysia, Taiwan and Singapore. The company said the new Hong Kong sites would provide outsourcing services to multinational clients. The company aimed to double global revenue from US$6.7 billion to more than US$10 billion by next year. Market researcher Gartner estimated worldwide revenues from IT outsourcing would grow from US$180.5 billion last year to US$253.1 billion in 2008.
Singapore/Malaysia/Philippines/Indonesia
Internet
- Singapore Telecommunications (SingTel) said it had entered into an agreement with Malaysia's TIME dotCom to link their corporate customers through private leased line circuits. The agreement between the two state-linked companies came four years after SingTel's bid for a stake in Time was scuttled because of Malaysian concerns over its implications on national security. The strategic partnership between SingTel and TIME dotCom will offer seamless and reliable data communication services to business on both sides of the Straits, according to a SingTel official.
Information Technology
- IBM will manage the information technology infrastructure of Singapore Airlines under a S$300 million ($181 million) deal signed and announced by the two firms. The seven-year agreement comes into effect in November. Under the agreement, IBM will manage SIA's data center, end-user computing support service and information technology help desk. The statement said that SIA staff in affected areas "has been offered the opportunity to join IBM on a package comparable in both remuneration and role." The airline forecasts savings of S$15 million (US$9 million) a year from the outsourcing move.
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