Nikkei up, Sony may fall after profit warning

Tokyo, Oct 20: Tokyo stocks are expected to rise on Friday as investors return to undervalued shares such as Hoya Corp. after the U.S. Dow closed above 12,000 for the first time, but Sony Corp.

could come under pressure.

Sony lowered its profit forecast for the year to next March by 62 per cent after the market closed on Thursday, far short of market expectations.

The electronics and entertainment conglomerate blamed the change on the cost of a battery recall and a larger loss at its game unit.

In New York, Sony's American Depository Receipts fell 1.5 percent to .68 or about 4,694 yen, compared with Thursday's Tokyo close of 4,790 yen.

''I cannot be optimistic about Sony as its profit revision underlined the weakness in its game business when compared with Nintendo Co. Ltd.,'' said Yusuke Sakai, manager of equities trading at Mizuho Securities.

''But it's Sony's problem. I don't see any big impact on the overall market,'' he said.

Nikkei futures traded in Chicago pointed to a rise in the market.

Nikkei contracts expiring in December closed at 16,575 in Chicago, a gain of 45 points from their Osaka close.

Tokyo's benchmark Nikkei average is likely to move between 16,450 and 16,650 on Friday, market participants said.

It lost 0.61 percent to 16,551.36 on Thursday.

Rakuten Inc. and other Internet stocks may be in focus as Web search company Google Inc. posted a 92 percent jump in quarterly profit on Thursday, sending its shares sharply higher.

Later in the day, investors will be looking ahead to earnings from several firms, including retailer Daiei Inc. and and KDDI Corp.

On the political front, by-elections for parliament's lower house will be held in Kanagawa and Osaka this weekend.

Goldman Sachs said in a report this week that the elections will be important in terms of gauging the cohesive strength of the new administration of Prime Minister Shinzo Abe, who took office on Sept. 26, in part as they are being viewed as preliminary skirmishes ahead of next year's national local and upper house elections.

STOCKS TO WATCH

Usen Corp.

Cable broadcaster Usen posted a group recurring loss of 3.64 billion yen (.78 million) on Thursday for the year ended in August due to lower than expected profits at its imaging unit, appraisal losses on shareholdings and higher costs for removal of utility poles.

Usen had estimated a full-year profit of 1 billion yen for 2005/06. It a profit of 6.27 billion yen a year earlier.

Sharp Corp.

Researcher MM Research Institute (MMRI) said on Thursday that Sharp shipped 4.3 million units of cellphones in Japan in the six months ended in September, expanding its market share to 19.3 percent from 17 percent a year earlier, thanks to its strategy of expanding its customer base.

Kyocera Corp. T> Electronics maker Kyocera is expected to receive a tax refund of roughly 4.3 billion yen, business daily Nihon Keizai said on Friday.

The company was slapped with 12.7 billion yen in additional taxes in 2005, the report said.

Mitsubishi Heavy Industries Ltd.

France's Areva, the world's largest maker of nuclear reactors, and Mitsubishi Heavy said on Thursday they will jointly develop a third generation 1,000 megawatt nuclear power plant and new types of reactors.

Nihon Chouzai Co. Ltd.

Pharmacy chain Nihon Chouzai said on Thursday it hopes its new generic drugs unit will propel the company's revenues and profit margins to grow fourfold in the next 10 years, as it seeks to be one of the nation's top generic brands.

REUTERS