Some interesting news, cross-posted from RB, with thanks to ghengis:
OT: DJ news re Hikari and Shigeta's troubles
interactive.wsj.com^J.SFT
The Wall Street Journal Interactive Edition -- April 25, 2000
Hikari Tsushin Prepares for Struggle
As Its Stock Price Continues to Slide
By PETER LANDERS
Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- Hikari Tsushin Inc.'s president, chastened by the 91% fall in his company's stock price since mid-February,
said he will scale back business targets and close unprofitable mobile-phone stores in a bid to revive investor
confidence. But Hikari's stock finished down by its daily limit for the 17th straight trading day.
Once considered a standard-bearer of Japan's Internet economy, Hikari has been pummeled by investors since its
surprise announcement of operating losses on March 30. The company is a leading distributor of mobile phones in
Japan and also invests in Internet companies.
"We misjudged the mobile market," said Hikari's president, Yasumitsu Shigeta, as he met with the media for the first
time in three weeks. "I am sorry that I have caused trouble for so many investors," Mr. Shigeta added.
Hikari said it now expects an operating loss of 11.6 billion yen ($109.6 million) in the year ending Aug. 31 -- the first
such loss in the company's 12-year history. The company expects to post a net profit of 13.5 billion yen thanks to
special gains from selling shares in Qualcomm Inc. and Cisco Systems Inc. of the U.S.
Mr. Shigeta had planned a rush of new store openings to meet what he saw as a surge in demand for mobile phones.
But he acknowledged that much of the new demand is going to NTT DoCoMo Inc.'s phones that provide e-mail and
Internet access. Those phones aren't sold at Hikari's franchise-operated shops. Mr. Shigeta said more than 40% of
Hikari's shops aren't profitable, and he pledged to close all stores that can't get into the black.
He expects the number of shops to fall to 900 from 1,445 as of April 3. Previously, Mr. Shigeta had set a target of
3,000 shops. Hikari also slashed projections for sales of new phones and digital-TV subscriptions.
Mr. Shigeta also acknowledged that Hikari will need to scale back its ambitious Internet-investment plans, which had
been a major factor behind enthusiasm for Hikari's stock. He predicted Hikari will make just two billion yen to three
billion yen in investments in the current half-year ending in August. The company has invested 70 billion yen so far in
other companies, mostly Internet-related.
Investors showed little enthusiasm for the new targets. Many institutional investors say they no longer trust Mr.
Shigeta, while bargain-hunters are apparently waiting for the market to settle before jumping into Hikari stock.
Hikari shares fell 9.2%, or 2,000 yen, to 19,800 yen each on Monday, and the number of sell orders for the stock
again overwhelmed buy orders. The company's shares have fallen by the daily limit set by the Tokyo Stock Exchange
every day since March 31. The record closing price was 230,000 yen, set on Feb. 15.
Mr. Shigeta said Hikari has "no risk" in its financial position. The company has 45.7 billion yen in cash on hand and
expects that figure to rise to 75.2 billion yen next month, while it has 30.5 billion yen in short-term debt, he said.
In another pullback, Mr. Shigeta said Hikari's Hitmail service, which offers Internet access and services to smaller
companies, probably will reach a peak after three years, due in part to competition from newcomers. One of the
competitors is Softbank Corp., a rival Japanese Internet investor. Mr. Shigeta said he might resign his position on
Softbank's board as demanded by Softbank's chief financial officer, Yoshitaka Kitao, who has said he wants to cut
ties to Hikari.
Write to Peter Landers at peter.landers@awsj.com |
