Wednesday, September 16, 2009

“NEC Casio Mobile Communications”! Hitachi, NEC, Casio Joint Venture Is Real

“NEC Casio Mobile Communications”
Japanese cell phone companies are merging themselves to fight for the market share, in Japan as well as ripe markets elsewhere in the world. Currently Sharp is the number on cell phone manufacturer in Japan. The new company shares will be divided as follows: NEC: 66%, Casio: 17.34%, and Hitachi 16.66%

The Press release;

Tokyo, September 14, 2009 - NEC Corporation (NEC; TSE: 6701), Casio Computer Co., Ltd. (Casio; TSE: 6952), and Hitachi, Ltd. (Hitachi; TSE: 6501/NYSE: HIT) today announced an agreement to integrate their mobile terminal businesses in April 2010 through the establishment of a joint venture company.

1. About the Business Integration

NEC develops and manufactures mobile terminals for NTT DOCOMO, INC. and SoftBank Mobile Corp. that capitalize on the company's core competencies and incorporate wireless communications technologies such as W-CDMA (*1) and LTE (*2), Linux (*3) platform development, low power consumption innovations and ultra-thin technologies.

In 2004, Casio and Hitachi jointly established Casio Hitachi Mobile Communications Co., Ltd. (CHMC) as a mobile terminal business company. CHMC capitalizes on image technologies from Casio's digital camera business, water/shock resistance technologies from Casio's wristwatch development and Hitachi's image processing technologies in order to provide mainly CDMA focused mobile handsets for KDDI Corporation and SoftBank Mobile Corp. in Japan as well as Verizon Wireless in the USA and LG Telecom in the Republic of Korea.

The new company will boast a competitive portfolio of products that draws strength from the complete integration of business functions between NEC's Mobile Terminal Operations Unit and CHMC, as well as merges the advanced technologies and product development experience of each company. Furthermore, NEC's IT/Network technology supported product development capabilities linked to service business for enterprises and consumers, combined with CHMC's consumer product technologies and planning strength, is expected to result in the creation of innovative synergies and the development of appealing new products, in addition to future growth that is anticipated from a range of new areas.

NEC, Casio and Hitachi will integrate their mobile terminal business in order to strengthen both domestic and international business while increasing competitive strength and capitalizing on each company's brand recognition through (1) achieving synergies in a variety of fields, including sales expansion, procurement and customer service, and (2) reinforcing product development by unifying technological assets, know-how and resources.

2. About the New Joint Venture Company

Overview of the new joint venture company formed through the integration of NEC's Mobile Terminal Operations Unit with CHMC
  • Company Name: NEC CASIO Mobile Communications, Ltd.
  • Head Office: Kawasaki City, Kanagawa Prefecture, Japan (NEC Tamagawa plant)
  • Capital: 1 billion JPY (at start of the joint venture)
    Share: NEC: 66%, Casio: 17.34%, Hitachi: 16.66%
    Capital increase planned to take place by the end of June 2010
    Capital after increase: 5 billion JPY
    Share after capital increase: NEC: 70.74%, Casio: 20%, Hitachi: 9.26%
  • Number of Board Members: 8 (NEC: 6, Casio: 2, representative director selected by NEC)
  • Consolidated Number of Employees: 2,200 including NEC Saitama (non-consolidated: 1,300)
  • Established: April 2010 (planned)
  • Accounting Period: April to March
  • Business Summary: Mobile terminal product planning, development, production, sales and maintenance

3. Business Integration Procedure

  1. By the end of December 2009: NEC establishes a 100% subsidiary company
  2. April 2010: The newly established subsidiary takes over NEC's mobile handset business through company split (*4)
  3. Same day as (2): The newly established company merges with CHMC (*5)
Other terms and conditions relating to the merger of the newly established subsidiary with CHMC are currently under discussion. The details will be announced upon their conclusion.

Overview of CHMC (The to-be-transferred Casio subsidiary company)

  • Company Name: Casio Hitachi Mobile Communications Co., Ltd.
  • Established: April 1, 2004
  • Business Summary: Cellular phone product development, design, production, procurement, quality control, sales and maintenance
  • Head Office: Higashiyamato City, Tokyo, Japan
  • CEO: Tateki Ohishi
  • Capital: 3 billion JPY (share: Casio: 51%, Hitachi: 49%)
  • Number of Employees: 506 (as of March 2009)
  • Accounting Period: April to March
  • Number of Shares Issued: 60,000
  • Three-Year Summary of Business Performance and Financial Condition: (millions of yen)
    Fiscal Term March 2007 March 2008 March 2009
    Total assets 65,791 62,761 61,063
    Net assets 15,499 15,400 2,864
    Net assets per share (in yen) 258,323 256,662 47,733
    Net sales 159,308 156,571 156,750
    Operating income 5,184 1,068 959
    Ordinary income 4,511 (366) 63
    Net income 3,126 (100) (12,536)
    Net income per share (in yen) 52,106 (1,661) (208,929)
    Dividends per share (in yen)

CHMC, presently a consolidated subsidiary of Casio, will become an equity-method affiliate with Casio holding a 20% stake in the new joint venture company as a result of its merger with the newly established NEC subsidiary and capital increase.


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