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SCMP Reporter

Battered Japanese Internet investor Hikari Tsushin has warned it could suffer an operating loss of 11.6 billion yen (about HK$853.76 million) for the year to August 31.

 The warning was further misery for the core Internet stock which has tumbled more than 90 per cent in the past two months.

 To turn itself around, the company yesterday unveiled a restructuring plan.

 However, news of the plan, which will place the focus of the company's mobile-telephone business on profit rather than volume, failed to impress investors.

 Yesterday in Tokyo, Hikari closed at 19,800 yen, down 9.2 per cent on the day.

 'It may not be that far ahead that we see the Hikari share price falling below the 10,000-yen line,' an analyst said.

 'How far it goes from there? That I don't know.'  The results' forecast and the restructuring plan were seen as a bid by Hikari's president, Yasumitsu Shigeta, to inject transparency into operations and stop the 12-year-old firm's fall from grace.

 Mr Shigeta yesterday admitted there was room for improvement in management. He also said he was eager to carry out reforms.

 Nonetheless, investors yesterday focused on Hikari's loss prediction, an about-face from an earlier profit forecast of eight billion yen.

 The loss, which compared with the previous year's 5.5 billion yen profit, was blamed by Hikari on a slowdown in mobile-telephone subscriptions.

 The company aims to sell 2.9 million mobile units in the year to August, compared with an earlier target of 3.6 million.

 Analysts said the share price of the company's flagship in Hong Kong - Hikari Tsushin International - could be hit today because of the loss warning.

 'Investment sentiment on Hikari Tsushin International definitely will be affected,' an analyst said.

 Hikari Tsushin International shares ended Thursday at 73 HK cents, down sharply from its HK$5.85 adjusted peak.

  The loss warning was also expected to hit Pacific Century CyberWorks, which has a strategic alliance with Hikari Tsushin, analysts said.

 As part of its restructuring, Hikari plans to shut down more than 700 sales outlets by August.

 This would bring the total to 1,540 from 2,283 as of April 3.

 'We are reducing sales outlets until all of them are operating at a profit,' Mr Shigeta said, indicating he hoped to complete the restructuring by August. But the restructuring plan failed to impress analysts.

 'In short, we cannot find anything surprising,' an analyst said.

 'The planned closure of Hikari's non-profitable sales outlets signals severe business conditions at this moment.'  Hikari raised its full-year pre-tax profit forecast by one billion yen to 28 billion yen, thanks largely to one-off gains of 23.9 billion yen from the sale of some shareholdings.

 Worries about Hikari's financial health deepened yesterday, after the company said it had paid back bank loans ahead of time.

 This stoked market speculation that banks, fearing the loans may go bad, may have asked Hikari to pay them back earlier than scheduled.

 Hikari said it had paid back 24.5 billion yen in loans arranged by Industrial Bank of Japan and 24 billion yen in a syndicated loan, put together by Sumitomo Bank and Bank of Tokyo-Mitsubishi.

 A Hikari Tsushin official said the loans were repaid ahead of schedule in an effort to bolster credibility among lenders.



Troubled Hikari fears a possible $853m loss