Jay,...I have to confess that I am not an expert on Japanese psychology, but we may be seeing some competing requirements in the Japanese investing market. First, there are the safety considerations. People in Japan have suffered through a massive major bear market for real estate and stocks. On the other hand their "safe" investments in postal savings do not pay much interest. The irony may come when the Japanese investor decides that if he is going to risk money in the stock market he may as well go for the newest investing fad, the internet. For the daring souls who venture back in the water, perhaps that is the way they will jump. I think we will see over the next few months and perhaps two years.
Anyway, Softbank closed pretty flat in Tokyo at around $250, but Yahoo Japan and Softbank Technology were both up the limit. There were a couple of articles that may have a few more details on the Nikkei Net:
Wednesday, August 11, 1999
Softbank, Microsoft, Tepco Announce Flat-Rate Net Service
TOKYO (Nikkei)--Softbank Corp. (9984), Tokyo Electric Power Co. (9501) and Microsoft Corp. announced Wednesday that they will set up a company in September to provide low-cost flat-rate Internet service in the Tokyo metropolitan region.
The new firm will begin trial service on Oct. 1, with full-scale service due to start next summer. It aims to sign up several million subscribers in three years. Free service will be offered to all schools in the region for the first 10 years.
Using Tepco's fiber optic networks as backbone lines along with high-speed wireless technology, the firm will offer service for no more than 5,000 yen per month, less than half the rate of service planned by Nippon Telegraph and Telephone Corp. (9432) using ISDN (integrated services digital network). Its transmission speed will be in the range of 1 megabit per second, more than 20 times faster than ISDN service.
Relay base stations will be installed on utility poles every several hundred meters apart, and users will be able to receive the service via wireless devices to be sold for 20,000 yen to 30,000 yen apiece.
Softbank plans to team up with other power companies to provide the service nationwide by forming similar joint ventures. Kansai Electric Power Co. (9503) said the same day that it is also considering a tie-up with Softbank to offer the service in the Osaka area.
Nagoya-based Chubu Electric Power Co. (9502) also said it was contacted by Softbank on the project, adding that it would give due consideration to the offer.
The new service is expected to stiffen competition in Internet service, helping to popularize it in Japan, where the Internet is not as popular as in the U.S.
(The Nihon Keizai Shimbun Thursday morning edition)
Thursday, August 12, 1999
Stock In Focus: Tokyo Electric Power
TOKYO (Nikkei)--The stock of Tokyo Electric Power Co. (9501) touched a year-to-date high of 2,805 yen on Monday after news broke that the firm will team up with Softbank Corp. (9984) and Microsoft Corp. to establish a new venture in Japan that will provide low-priced, high-speed Internet access.
Later that day, however, the issue fell prey to selling on the rebound, mostly by institutional investors. The stock closed Wednesday at 2,715 yen, down 20 yen.
According to Softbank President Masayoshi Son, the Internet service will be much cheaper and faster than a service planned by Nippon Telegraph and Telephone Corp. (9432), which will charge 10,000 yen per month. But he failed to offer specifics such as projected capital spending and earnings from the operation.
Tokyo Electric spends some 1.2 trillion yen a year on capital investment. Its president, Hiroshi Araki, has yet to comment on what impact the new venture is expected to have on the firm's 30 billion yen in annual telecom-related investment.
Some analysts note that Tokyo Electric's own telecommunications business, handled mainly by affiliate Tokyo Telecommunications Network Co. (TTNet), will not be involved in the new Internet venture and might even end up being a competitor. And it is still unclear how much of a contribution, if any, the new venture will make to Tokyo Electric's profit.
In addition, Tokyo Electric's over 10 trillion yen in interest-bearing debt will likely weigh down its share price once the current round of Internet stock fever runs its course.
An improvement in business sentiment, an anticipated increase in government bond issuance and concerns over a possible U.S. interest rate hike are all likely to push up Japanese interest rates, raising the utility's debt burden and creating a climate not conducive to aggressive buying of the issue.
(The Nikkei Financial Daily Thursday edition)
Copyright 1999 Nihon Keizai Shimbun, Inc., all rights reserved.
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