Japan's Internet, Phone Stocks Gain; Honda Falls on Forecast

By Masaki Kondo

July 28 (Bloomberg) -- Japan's communication-related shares rose after Yahoo Japan Corp. reported its fastest profit growth in a year. Automakers sank after Honda Motor Co. cut its full- year earnings targets.

Yahoo Japan, operator of the nation's most visited Web site, gained the most in more than three months while Honda, the nation's second-largest automaker, headed for the biggest decline since April 4. Advantest Corp., the world's biggest maker of memory-chip testers, fell the most in four months after forecasting a loss as chipmakers scale back investment.

``Internet companies have little to do with U.S. financial turmoil, and there's still room for them to boost profit,'' said Yoji Takeda, who helps manage the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. ``They're in a relatively safe position.''

The Nikkei 225 Stock Average climbed 6.31, or 0.1 percent, to 13,341.07 as of 1:52 p.m. in Tokyo. The broader Topix index dipped 0.64, or less than 0.1 percent, to 1,298.64. Eighteen of 33 industry groups on the Topix rose.

Yahoo Japan said net income rose 19 percent in the three months to June 30, the fastest quarterly gain since June 2007, on increased revenue from online advertising. Analysts at Deutsche Bank AG and KBC Securities raised their ratings on the company.

The shares surged 5 percent to 42,000 yen, set for the sharpest jump since April 7. NTT DoCoMo Inc., the nation's most profitable wireless carrier, rose 3.2 percent to 168,000 yen, while its parent Nippon Telegraph & Telephone Corp. jumped 3.3 percent to 529,000 yen.

`No Surprise'

DoCoMo may report a 23 percent rise in operating profit to more than 250 billion yen ($2.32 billion) for the three months to June 30, the Nikkei newspaper said on July 26. An installment payment plan for handsets helped DoCoMo cut the costs to subsidize phones, the newspaper said.

``It would be no surprise if DoCoMo reports a near 30 percent gain in first-quarter operating profit,'' Daisaku Masuno, an analyst at Nomura Securities Co., wrote in a Japanese-language report today. He has a ``neutral'' rating on DoCoMo and a ``strong buy'' on NTT.

Honda lost 4 percent to 3,610 yen. The company cut its full- year target for operating profit by 3.1 percent because of higher material costs and lower vehicle sales. Hino Motors Ltd., Japan's largest maker of heavy-duty trucks, tumbled 4.1 percent to 633 yen after Mizuho Investors Securities Co. reduced its recommendation from ``neutral plus.''

NGK Insulators Ltd. plunged 6.9 percent to 1,752 yen on a Nikkei newspaper report it will cut production of emission filters for diesel engines by as much as 50 percent as sales of large vehicles are falling in North America.

Automakers were the biggest losers among 33 industry groups on the Topix.

Advantest, Trading Companies

Advantest sank 7.4 percent to 2,140 yen, the most since March 3 and leading declines on the Nikkei. Tokyo Electron Ltd., the world's second-largest maker of chip gear, dropped 4.7 percent to 5,850 yen.

Advantest's first-half loss will probably be 2.5 billion yen compared with a 16.9 billion yen profit for the same period a year ago as orders plunge 62 percent, it said on July 25.

Mitsui & Co. , Japan's second-largest trading company, climbed 5.2 percent to 2,220 yen, making it the biggest winner on the Nikkei. Bigger rival Mitsubishi Corp. added 2.9 percent to 3,150 yen. Prices for gold and silver rose in New York while copper rose a second day in Asia on signs U.S. demand may be recovering.

``Trading houses are in one of the few industries that is set to announce some strong first-quarter earnings, and investors are buying into that,'' said Mitsushige Akino, who oversees about $560 million as chief investment officer of Ichiyoshi Investment Management Co. in Tokyo.

Ricoh, Honda

Ricoh Co., Japan's second-biggest maker of office equipment, climbed 2.8 percent to 1,758 yen, set for the highest since July 9. The company reiterated its annual net income target of a 1.4 percent gain even after posting an earnings drop in the three months to June 30, owing to the stronger yen.

Nikkei futures expiring in September was unchanged at 13,360 in Osaka and rose 0.2 percent to 13,360 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.