Japan's Chip Stocks Fall on Earnings Outlook; Developers Surge

By Masaki Kondo and Makiko Kitamura

July 10 (Bloomberg) -- Japan's chipmaker stocks fell on speculation a slowing global economy will crimp demand, while Urban Corp. led by property developers higher after BNP Paribas SA decided to buy its convertible bonds, allaying funding concern.

Elpida Memory Inc., Japan's largest maker of memory chips, sank to the lowest in four months after Merrill Lynch & Co. said global chip leader Intel Corp. may not beat earnings estimates. Urban, Japan's eighth-largest developer, surged the most in two years, while Creed Corp., a real-estate advisory company, headed for a two-week high after forecasting higher profit.

The Nikkei 225 Stock Average dipped 12.64, or 0.1 percent, to 13,039.49 at the 11 a.m. break in Tokyo. The broader Topix slid 0.62, or less than 0.1 percent, to 1,284.91. The Nikkei swung between a gain and loss 10 times.

``What have been considered fundamentals for investing are crumbling,'' said Yuuki Sakurai, general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion. ``Now is the time to fasten your seatbelt and not move around too much.''

Corporate technology spending has fallen, and consumers in emerging markets have slowed purchases, hurting Intel's earnings, Merrill Lynch said yesterday. Cisco Systems Inc., the world's biggest maker of computer-networking equipment, may forecast revenue for next quarter that's less than analyst estimates, UBS AG said yesterday, sending the shares to a near two-year low.

Elpida, Japan's largest maker of computer-memory chips, dropped 3.8 percent to 3,030 yen, headed for the lowest since March 17. Advantest Corp., the world's biggest maker of memory- chip testers, fell 2.4 percent to 2,070 yen. Tokyo Electron Ltd., a semiconductor equipment maker, lost 1.2 percent to 5,730 yen.

Developers Surge

Electronics makers were the largest drag on the Topix, while developers posted the biggest gain among 33 industry groups.

Urban surged 18 percent to 245 yen, set for the sharpest advance since May 2006. BNP Paribas will proceed with the purchase of 30 billion yen ($281 million) worth of convertible bonds from Urban, the developer said yesterday. Urban plunged 28 percent on July 4 amid speculation the deal might not go through.

Creed soared 13 percent to 89,400 yen, en route to the biggest gain since April 2. Annual profit is expected to rise 8.3 percent this business year, after having fallen by almost a fifth in the previous period, the company said yesterday.

Nikkei futures expiring in September retreated 0.4 percent to 13,070 in Osaka and slumped 0.7 percent to 13,050 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.