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Livedoor Shares Trade for First Time Since Probe (Update1)
Jan. 25 (Bloomberg) -- Livedoor Co. shares traded normally for the first time since prosecutors raided the Japanese Internet company last week, clearing a backlog of orders that forced the Tokyo Stock Exchange to shorten trading hours to stay open.
More than 287 million shares changed hands, equivalent to a quarter of the company, according to Bloomberg data. It traded at 155 yen as of 2:15 p.m. Tokyo time, compared with 696 yen before Japanese prosecutors raided Livedoor on Jan. 16 to investigate suspected securities fraud.
Livedoor, whose shares are under review for possible delisting by the Tokyo Stock Exchange, ousted its founder and president Takafumi Horie yesterday after he was arrested with three other senior executives to face charges they broke securities laws. The Tokyo-based company had about 100 billion yen ($869 million) of cash as of September, and it earned 15.5 billion yen in the last fiscal year.
``This is the start of the money game,`` said Toshitaka Uchiyama, head of Market & Technologies Inc., a Tokyo investment consulting firm. ``Retail investors are buying the stock on expectations that funds, mainly foreign ones, are going to rush in to buy the assets`` inside Livedoor.
At 155 yen a share, Livedoor has a market value of about 163 billion yen, down from 730.4 billion yen on Jan. 16. Prosecutors allege the company and its affiliates may have overstated earnings and misled shareholders.
Each day since the raid, the stock was adjusted down by the daily limit at the end of trading as sell orders overwhelmed bids to purchase the stock, preventing normal transactions. The exchange shut down early on Jan. 18 because its computers couldn`t handle the surge in orders. Trading hours have since been reduced.
Cecile, Livedoor Auto Gain
Livedoor employs about 2,500 staff and has 44 group companies. The company earns more than 50 percent of its revenue from finance business, such as online brokerage and e-commerce. Other units offer Internet portal, computer software and online advertising.
``There is a high chance that the units with future potential will be sold off,`` said Katsuyuki Fujii, a trader at Yamamaru Securities Co. in Tokyo. ``Livedoor probably has abundant cash even if its market value has tumbled.``
Livedoor`s affiliates such as Cecile Co., Livedoor Auto Co. and Dynacity Corp. have seen their stock prices rebound this week.
Shares of Livedoor Marketing Co., the affiliate at the center of the investigation, are poised to fall by their limit for a seventh day.
Net income at Livedoor surged more than fourfold to 15.5 billion yen in the year ended Sept. 30 from a year earlier, according to the company`s statement dated Nov. 17. Sales more than doubled.
`Not For Sale`
``We`re not open for sale,`` Livedoor director Fumito Kumagai said at a news conference yesterday. Kumagai, 28, replaced 33-year-old Horie as the most senior representative on the company`s board. ``We want to continue utilizing our valuable assets and staff,`` he said. ``Our capital looks stable.``
Livedoor, founded in 1997, expanded its sales 13-fold in five years, buying more than 20 companies such as an online brokerage and a car dealership.
The company yesterday said Kozo Hiramatsu, 60, will replace Horie as president. Hiramatsu heads the group`s Yayoi Co. unit.
``There may be some parts of this company that may be worth while buying, but the accounting isn`t clear,`` said Yoji Takeda, who oversees $400 million in Asian equities at RBC Investment Management (Asia) Ltd. in Hong Kong. ``You have to do the due diligence.``
To contact the reporter on this story:
Aiko Wakao in Tokyo at awakao@bloomberg.net