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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: netinvestor2 who wrote (12966)	2/6/1999 11:33:00 PM
From: Rusty Johnson	Read Replies (1) \| Respond to of 14631

Shares of Oracle Unit Soar 73% In Hottest Japanese IPO in Years By JAMES PARADISE Dow Jones Newswires TOKYO -- Shares of Oracle Corp. Japan soared a spectacular 73% in their debut on the over-the-counter market Friday as the company lived up to its billing as one of Japan's hottest initial public offerings in years. The shares, which had been heavily oversubscribed, were buoyed by confidence in the company's long-term growth prospects, a history of strong performances by many other recent IPOs, and a wave of interest in Internet-related stocks in both Japan and the U.S. The company, a provider of computer system software and a subsidiary of Oracle Corp. of the U.S., isn't strictly in the Internet business. But analysts said its well-known name and its strength in a growing high-tech field had caused many Japanese investors to place it in the same category as highflying Internet stocks. "This is part of the Internet mania," said Craig Nelson, senior analyst at Dresdner Kleinwort Benson. The shares closed their first session at 12,100 yen, up from their IPO price of 7,000 yen, in very heavy volume of 2.6 million shares. However, many analysts said the shares may have risen too far, too fast. As a result, some analysts believe a tug-of-war could be shaping up between bullish individual investors and speculators on the one hand and institutional investors -- preoccupied with the company's high price/earnings ratio -- on the other. "Sentiment in the market is mixed between aggressive individuals and conservative institutions," said Noriko Takahashi, analyst at Warburg Dillon Read. "It's not clear which group will prevail." At its debut price, Oracle Corp. Japan had a market capitalization of around 859 billion yen ($7.66 billion), making it the largest company on the OTC, a company spokesman said. Analysts estimated the company accounted for about 10% of the market's entire capitalization. Thus, if the market as a whole concludes that Oracle Corp. Japan is overpriced and heavy profit-taking pulls down its shares, the whole OTC market could be dragged down with it, some analysts warned. "Obviously it will have an influence on the market direction, and it wouldn't be surprising if it puts a damper on the frothiness of the market and the irrational exuberance of some Internet stocks," said Mr. Nelson at Dresdner Kleinwort Benson. "A lot of people are saying the stock is a little high now," said Tadashi Ohta, senior analyst at Jardine Fleming Securities. "Four or five years out it could be fair value." In the fiscal year through May 1998, the company's net profit rose 19% to 5.61 billion yen on sales of 46.59 billion yen, up 5.1%. For this fiscal year, it forecasts net profit will rise 30% to 7.30 billion yen as sales climb 14% to 53.02 billion yen. The IPO cut parent Oracle's stake in its Japanese subsidiary to 85% from 91%. The roughly 35 billion yen raised by the IPO will be saved for future capital expenditures, the company said.