Power Shift in China
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Hikari Tsushin Tumble May Signal End of Era
By Kiyoshi Takeaka
TOKYO (Reuters) - A tumble in Japanese Internet stocks, notably former market favorite Hikari Tsushin Inc that has lost 60 percent in a month, may signal the beginning of the end of an era of dot.com mania, analysts said on Monday.
What started a month ago as selling of high-flying tech stocks to lock in huge gains ahead of the fiscal year-end on March 31 has snowballed as sharp declines triggered margin calls.
Hikari Tsushin, active Internet Investor and mobile phone subscription agent, ended the Monday session ask-only at 88,500 yen ($832.40), down more than 60 percent in the past month.
Softbank Corp, another key Internet issue, finished ask-only at 94,200 yen, down 48 percent since February 18.
Analysts see more than just technical factors behind the recent downtrend in Internet stocks.
``Japan is now getting out of phase one and into phase two, trailing about a year behind the United States,' said Darrel Whitten, a strategist at ABN AMRO Securities.
U.S. Internet stocks went through a substantial correction last April, and after the turning point, e-commerce ventures focusing on business-to-business transactions and telecom infrastructure firms emerged as winners, Whitten said.
Likewise in Japan, investors will now become more selective in investing in Net stocks, paying more attention to their bottom lines and business models, he said.
Toshiaki Iba, an analyst at Tokyo Mitsubishi Securities, concurs.
``The days of good Net stocks and bad Net stocks moving in a pack are over. In the next stage, we have clear winners as well as clear closers,' Iba said.
Hikari Tsushin Woes Continue
Analysts are divided in their views over how far Hikari Tsushin's shares will fall. The company has been hit especially hard among Internet stocks due to various specific factors.
Whitten said support is expected at around 51,500 yen.
However, Iba said if the market recognizes Hikari Tsushin as one of the losers in the second phase of Net stock valuation, its shares could plummet toward 3,000 to 4,000 yen, levels the stock traded at a year and a half ago before its bull run.
Hikari Tsushin plunged 24 percent on Friday in reaction to a negative magazine article on its business practices, coupled with rumors that company president Yasumitsu Shigeta had been arrested for insider trading.
A company spokeswoman said Shigeta had not been arrested. She also said the article contained factual errors.
Softbank's chief financial officer Yoshitaka Kitao on Friday launched a blistering tirade against Shigeta, who sits on the Softbank board of directors, calling him a copycat.
``What he's (Shigeta) doing is basically imitating everything that Softbank is doing, particularly after he joined the board.
``I strongly urge him to get out of our board,' Kitao said.
Topping off the bad news, Iba said DDI Corp, Japan's third-largest telecommumications company, is likely considering terminating a contract authorizing Hikari Tsushin to sell its mobile phones.
DDI said it cannot comment on specific contracts with its distribution agents.
Ripple Effect
Hikari Tsushin's tumble cast a pall over a subsidiary's debut on the Mothers market last week.
E-mail service provider Crayfish Co Ltd jumped more than 400 percent when it debuted last Wednesday on the U.S Nasdaq market. However, it was ask-only on Monday at 25 million yen on Tokyo's Mothers market on its second day of trade, well under half the price of its Nasdaq debut. |
