Asian Tech Stock Weekly Review May 3

Asian Tech Stock Weekly Review May 3

Mobile content services firm Nano Media reported full year results for the period ending March 2010. The company sales declined by 4.3% to 2.54 billion yen (US$27.7 million) while net loss reduced to 98 million yen (US$1.06 million) from 1.08 billion yen (US$11.78 million) the previous year.Softbank Mobile Corp (OTCPK:SFTBF) said that it will start selling Apple Inc (AAPL) iPad tablet computer in Japan on May 28 under a partnership with Apple. A basic model with Wi Fi wireless access is priced at 48,960 yen (US$535) and a model which can use both Wi Fi and 3G mobile network service costs 58,320 yen (US$637). A monthly network usage fee of 3,225 yen (US$35) is necessary for the 3G model under a two year contract.Media, Entertainment and GamingNintendo (OTCPK:NTDOY) recorded its first annual profit fall in the last 6 years, hit by declining global sales and price cuts on the Wii video game console. The company net incomes for twelve months ending March 2010 dropped by 18% to 228.6 billion yen (US$2.5 billion) while revenues dropped by 22% to 1.4 trillion yen (US$15.3 billion). The company also issued a grim forecast for the current financial year and expects sales and earnings to drop by 2.5% and 12.5% respectively. Nintendo, however, expressed confidence in the popularity and quality of its game consoles and is betting on a new hand held game console due for release this year, which allows users to play 3 D games without using special eye glasses. Rivals Microsoft (MSFT) and Sony (SNE) are also launching similar devices, but with special eyeglasses. Companies like Nintendo also face a big challenge from devices like the iPhone and the iPad, which might eat away into their market share by providing cheaper, easy to use games.Japan publishing industry is rallying to protect the US$20 billion paper back book business in the country, even as Apple, Sony Corp and Amazon (AMZN) plan the launch of their e reader devices in the country. A network of 31 large publishers in the country, called the Electric book publishers of Japan, could potentially jeopardize the success of the gadgets in the country, as they begin lobbying to protect their book publishing business where they control pricing. The association has threatened not to supply content to the companies if the publishers are not allowed to maintain their paper back book publishing businesses. Sony and Panasonic (PC) had previously attempted to launch e book readers in 2003, only to fail due to the lack of electronic content. The association will agree to supply content only if the publishers are allowed to participate in a lion share of the revenues from the business. The paper back industry has shrunk to a quarter of its size in the 1990 as people increase their engagement time with devices like mobile phones and laptops. Japan market for e book content totaled 53 billion yen (US$578 million) in 2009 and is expected to increase to 87 billion yen (US$948 million) by 2014. Currently comic book content dominates the market for e content in the country.Capcom, a prominent developer and publisher of video games, reported sales of 66.8 billion yen (US$728.5 million) and net profit of 2.17 billion yen (US$23.67 million) for fiscal year ending March 2010. The figures reflect a decline of 27.3% and 73.1% respectively over the previous year. When the transaction is completed, the founders of Sophos will retain a significant minority shareholding. TA Associates, a minority shareholder in Sophos since 2002, will sell its full interest to Apax in this transaction. Sophos operates in the IT security market, protecting companies of all sizes against computer and data threats. (KTC) and LG Telecom, two large mobile carriers, have agreed to charge subscribers by the second for voice communications. The companies are following a similar move by market leader SK Telecom (SKM) in March. announced that its first quarter net profit jumped to more than five times its year earlier level, largely on one time gains from a revaluation of its merged entities. For the three months ended March 31, 2010, LG Telecom’s net profit rose to 543.2 billion won (US$476 million) from 101.2 billion won (US$88.7 million) a year earlier. LG Telecom said it booked revaluation gains amounting to 496.5 billion won (US$435.1 million) from its newly acquired units, fixed line operator LG Dacom Corp. and service provider LG Powercom, which it absorbed Jan. 1. Factoring in the merger with LG Dacom and LG Powercom, net profit in the first quarter of 2009 was 173.4 billion won (US$151.9 million), with operating profit at 225.2 billion won (US$197.2 million) and sales at 1.79 trillion won (US$1.6 billion). LG Telecom had 14.3 million subscribers at the end of March, up from 12.1 million a year earlier, while average revenue per user from its wireless business fell 3% from a year earlier to 32,363 won in the first quarter.KT Telecom, Korea largest fixed line operator, is reported to be on the verge of finalizing a joint venture with Samsung Electronics (OTC:SSNLF) and Intel Corp. (INTC). The partnership will promote WiBro, a 4G technology otherwise known as WiMax. The joint effort involves investing in a legal entity together for the expansion of Wireless Broadband (WiBro) technology in international markets. The companyannounced net profit of 3.99 trillion won (US$3.6 billion) and revenues of 34.64 trillion won (US$31.25 billion). The results represent growth of 600% and 21% respectively over the same period last year. Growth was mainly driven by booming demand for semiconductor chips as well as a general upturn in demand for electronic goods. The chip division contributed nearly 50% of net profit, while the handset division also improved profits from last year, even on the back of lower volumes. announced plans to issue a bond offering in a foreign market yet to be decided. The service, called the Ovi Life Tools will offer information about the weather, health care, market prices for produce, and English lessons for as low as 5 to 8 yuan per month. The service will be available on two low end handset models starting immediately. The service is positioned as an alternative to the internet for the farmer and will offer other services like entertainment etc in the future.China Mobile (CHL) announced the launch of a new online platform, with the objective of attracting over 200 million users in the near future. The new service allows users to download digital publications through cell phones and e reader devices. The new platform is basically an applications store created along the lines of Apple iTunes, which will host a series of online publications. The company book store will also support the iPad.China Unicom (CHU) announced a 17% price cut in iPhone handset prices. The cheapest 3G iPhone will now cost 4,999 yuan (US$732) now. Chinese mobile companies are under pressure to maintain growth as a maturing market and heavy investment on 3G networks have hit profitability and growth rates in the country.Media, Entertainment and GamingOut of home advertising network operator AirMedia Group Inc. (AMCN) announced first quarter results for the current year. The company reported a net loss of US$6.5 million on revenues of US$48.8 million. The figures compare with a net loss of US$1.3 million and revenues of US$32.8 million respectively in the first quarter of the previous year and net loss of US$19.4 million and revenues of US$45.2 million in the previous quarter. The company expects to break even in the third quarter of 2010 and expects total revenues in the second quarter to be between US$55 million and US$57 million. For the full year, the company expects revenues to be between US$230 million and US$250 million. AirMedia operates an extensive network of digital television screens and digital television frames in airports and gas stations in China.Leading media and gaming company Shanda Interactive Entertainment Ltd. (SNDA) announced a new partnership with the municipal government of Huzhou, Zhejiang province. As part of this agreement, Shanda has agreed to invest 3 billion yuan (US$440 million) over the next five years to develop tourist spots in the province like a theme park and other related products. Analysts expect revenues of 4.2 billion yuan (US$615 million) and net income of 1.78 billion yuan (US$260 million) for the quarter. These figures represent an increase of 67% and 72% year on year respectively. Growth in its gaming operations will constitute a significant part of the overall growth for the company. Tencent recently picked up a 10% stake in Russian company Digital Sky for about US$300 million. In related company news, Tencent also announced that it has obtained video rights to broadcast the 2010 FIFA football world cup in mainland China from the China Central Television nationwide internet television station,CNTV.A new report by JP Morgan Asia Pacific Equity research expects NASDAQ listed Baidu (BIDU) share price to reach US$850 from the current levels of US$710, by the end of the year. The expected share price will value the Chinese internet giant at US$30 billion, an increase of 25% from its current valuation and larger than Yahoo current market value. Baidu is the world second largest search engine and is the dominant market leader in China, one of the fastest growing internet markets in the world. Baidu position in China also became stronger after Google (GOOG) censorship disputes with the Chinese government, which led to speculation and uncertainty about Google future in the country and made advertisers shift to Baidu. The only Chinese internet firm with a valuation higher than US$30 billion currently is online gaming company Tencent Holdings, which has a market value of about US$37 billion. These figures compare with a US$170 billion valuation for Google, the world leading internet company. Baidu reported stellar first quarter results last fortnight, with year on year growth of 165% and 60% in net income and revenues respectively. China currently has about 400 million internet users, according to a press release by the State Council Information office.

Government Promises to invest in Brazil

Government Promises to invest in Brazil

Compared to a number of other developed countries, the rail transport network in Brazil is sometimes regarded as under developed. However, the issue is complicated, as are so many other features of this huge country. After all, Brazil has over 200 million people now and at 8.5 million square Kilometres (3.3 million square miles) it is the largest country in South America and the fifth largest country in the world in terms of land area. This enormous size provides an important context when we look at rail transport in the country.

The national rail system totals just under thirty thousand Kilometres at present, but this is made up of track with four different gauges. By far the most common though is the so called ‘narrow gauge’ of 1 metre width, which makes up over three quarters of the network. Next comes the ‘broad’ category of 1.6 M., at about 15% of total track.

Only a small part of either of these is electrified at present. The final two gauges total between them less than 600 Km and are responsible for only a very small part of traffic. It’s important to note that at present the rail system is mostly freight based. Passenger transport is mainly in major urban areas plus just a few long distance routes. Included among these is the new high speed (ninety minute) link between Rio and Sao Paolo. Unfortunately this will not be ready in time for Brazil’s hosting of the FIFA football World Cup in 2014.

The Government has promised an investment of over US$3 billion to develop the rail network over the next couple of years, with separate provision for city metro systems. The large number of nineteenth and early twentieth century private rail companies were all brought together and nationalised in 1957 but the process was gradually reversed fifty years later. Nowadays rail travel in Brazil (for both freight and passengers) is provided by a wide range of organisations, both public and private. These include operators such as America Latina Logistica (the largest with over a Billion a year (US$) revenue), Super Via and Companhia Paulista. There have been (and still are) interesting opportunities for investment in Brazil when it comes to rail transport.

On the urban/municipal level there are quite a few ‘metro’ commuter (and even tram) systems throughout the Country, some of them very large scale. Obviously included are the ones in Rio de Janiero, Brasilia and Sao Paolo but also in Belo Horizonte, Recife and Porto Alegre among others. New systems are currently being built in Salvador and Fortaleza. The Sao Paolo system is by far the largest, not only in Brazil but (apart from Santiago which just beats it) also in the whole of South America. This size is no surprise as Sao Paolo is not just the biggest city area in Brazil but in the whole of the Southern hemisphere too. Improved freight and passenger networks will have an important spin off for investment opportunities and the national economy, thereby enhancing greatly the prospects for investment in Brazil transport and people wish to invest In Brazil in general. The sector may be changing steadily but it certainly has a bright future in Brazil.