International -- Asian Business
A Cell-Phone Warrior Licks His Wounds (int'l edition)
Two months ago, Yasumitsu Shigeta, president of Hikari Tsushin Inc., Japan's largest cell-phone retailer and a key Internet investor, reigned as one of the kings of New Japan. Then, in late March, Hikari reported an operating loss. The news shocked investors, who had been told by Shigeta to expect a profit. Hikari also was dogged by revelations that its franchises, eager to book commissions, padded results.
In late April, Shigeta announced a restructuring plan that seems to have halted the slide in Hikari's stock. Even so, it's now trading at about $180, down from a Feb. 14 peak of $2,295. On April 27, a chastened Shigeta discussed his plans and reflected on his mistakes with Tokyo correspondent Irene M. Kunii.
Q. How serious is the situation?A. Hikari remains No. 1 in terms of cell-phone sales, and the number of new subscribers to our Hit Mail service [which rents servers and provides Web services to small outfits] is growing steadily, from 824 to more than 10,000 companies. Over the past year or so, we've taken 19 companies public--all solid ventures with good growth prospects. We've many areas of strength; we'll restructure the weak ones.
Q. Yet even as the cell-phone market was maturing, you decided to boost the number of retail outlets to 3,000.A. Now I can say our plan to expand was reckless, but at the time we were growing rapidly. Today [the shops] have become a liability. I should be done with most of the restructuring by August, when I'll reduce the number of outlets [to 900 from 1,610 in February].
Q. Hikari has been criticized for lacking strong management. True?A. Various problems tied to rapid growth are emerging. I will resolve them by introducing a stronger management system. One change will be to move the sales division to headquarters, where we can conduct closer checks [on wayward franchises].
Q. Will you bring in outside experts?A. To improve corporate governance, I am thinking of introducing outside board members. I am also thinking of splitting up our distribution, investment, and incubation businesses, perhaps launching them as separately listed companies.
Q. What will you focus on now?A. We plan to launch mobile broadband services and products. We'll move into e-mail services for business over wireless networks.
Q. Next year, NTT DoCoMo--the only carrier you don't represent--will launch a high-speed mobile communications system. What will you do?A. That's probably our biggest risk. NTT DoCoMo holds the No. 1 market position and is way ahead of its rivals. [As a representative of other carriers] we will be in a tough position. We'll invest in ventures developing wireless Internet services. We've already invested in some, like Tumbleweed Inc. and Phone.com in the U.S.
Q. How about Hikari Tsushin Capital Inc., your investment arm?A. It has invested in some 140 Internet and communications firms around the world. It'll move into incubation services, stressing wireless Internet and business-to-business applications.
Q. If the stock market fails to recover, how will you pay for all the new services?A. For every project, we have partners. Still, we need cash, and I have plenty set aside for expansion.
Q. Softbank Corp. CFO Yoshitaka Kitao asked you to resign as a member of Softbank's board, describing you as a competitor. Comments?A. I've given up the post. At any rate, I respect [Softbank founder Masayoshi] Son, whose invitation I accepted to become a board member [last June]. I decided I had to concentrate on my company, regardless of what Mr. Kitao has been saying.
Q. Why was Kitao so aggressive?A. I can't imagine why. It wasn't normal behavior.