TOKYO (04/07/2000) - For Japanese Internet investors the last week has been one of the most brutal on record after loss warnings from two of the biggest local names unnerved market participants who had already been selling out of the sector over the last month.
The stage was set a week ago on Friday when Hikari Tsushin Inc., a telephone service sales agency that has branched out into venture financing and the Internet, rocked the market with news of an expected 13 billion yen (US$123.8 million) operating loss for the half year to February 29 on losses from its Internet ventures. The company had previously been forecasting a 6 billion yen profit for the period and a day earlier had said it would post a 23.9 billion yen profit in the period from the sale of shareholdings it owns.
Worse still, the earnings forecast revision came just as the stock looked to be settling down after a dive that had taken it from a high of over 200,000 yen to around 80,000 yen in early March after a magazine published an article critical of the company's business practices. Hikari Tsushin disputed the magazine report but many investors exited the stock all the same.
Then yesterday afternoon after the market had closed, Internet industry giant Softbank Corp. caused shockwaves with a profits warning of its own. The company said it expects to post a 55 billion yen group current loss for the fiscal year that ended on March 31. The prediction means Softbank moved deeper into the red last year after reporting a 15 billion yen group current loss in the year earlier.
Despite a 220 billion yen profit that Softbank said it will record from the sale of stakes in Trend Micro Inc. and Softbank Technology, large losses in other U.S. units will hit hard, it warned in a statement. The company will book a 47.5 billion yen foreign exchange loss on yen-dominated debts held by a U.S. unit, a 77 billion yen net loss from the sale of Kingston Technology and will write off 120 billion yen in losses related to Ziff Davis.
Softbank posted its sixth straight day of declines ending the day down 3,000 yen at 71,500 yen after spending much of the session down by its maximum daily limit of 5,000 yen. For Hikari Tsushin the picture was no better with the company's shares only at 48,800 yen for a loss of 61.5 percent on the week.
In the midst of the declining market, web site design firm Livin' on the Edge Co. Ltd. conducted its initial public offering (IPO) on the Tokyo Stock Exchange's Mothers market for high growth stocks. Listing yesterday morning at 6 million yen, the issue failed to attract a single trade for the entire session.
Most of the other stocks on the Mothers market, which opened with a bang last December, are well off their highs and some are trading below their IPO prices.
Company Name IPO Price Year to date high Friday closeInternet Research Institute Inc. 11.7 million yen 77.41 million yen 20.0 million yenLiquid Audio Japan Inc. 3 million yen 12.21 million yen 3.66 million yenMet's Corp. 7 million yen 23.11 million yen 2.55 million yenCrayfish Co. Ltd. 13.2 million yen 32.80 million yen 14.7 million yenSnova Corp. 1,200 yen 999 yen 500 yenCyber Agent Ltd. 15 million yen 16.99 million yen 9.7 million yenLivin' on the Edge Co. Ltd. 6 million yen not yet traded not yet traded