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[Ikarus]

Monday, April 3, 2000
INTERVIEW: Hikari Tsushin Chief Defends
Earnings Shortfall

TOKYO (Nikkei)--Hikari Tsushin Inc. (9435) shares went limit-down
Friday and ended the day ask-only at 73,800 yen, following the
company`s announcement Thursday of a 13 billion yen operating
loss for the fiscal half ended Feb. 29, down from prior forecasts of 6
billion yen in profit.

However, at a news conference on March 15, company officials had
told analysts and reporters that "sales and earnings are proceeding
smoothly." As a result, increasingly many market participants
distrust the telecommunications service provider, according to an
official at Commerz International Capital Management (Japan) Ltd.

The Nihon Keizai Shimbun asked Hikari Tsushin President
Yasumitsu Shigeta about his company.

Q: Two weeks ago you said that earnings were moving ahead
smoothly.

A: The main purpose of that conference was to show that there was
no basis to rumors of my death or arrest. In regard to our earnings,
because we will be incurring extraordinary charges due to store
closures, I explained that we will achieve our net profit figures,
which I feel is more important.

Q: But your interim net profit figure of 4 billion yen, which beat
earlier forecasts by 1 billion yen, was aided by 23.9 billion yen in
profit on stock sales, which you posted on the non-operating side of
your balance sheet.

A: Our figures were not finalized until immediately before the
announcement. We had always intended to announce our earnings
revisions as soon as our figures were solid. The announcement was
at the end of March, but that should not be perceived as a
deliberate decision on our part.

[The end of March is the typical end of the fiscal year, and any
impact on institutional investors` portfolio performance will be felt
then.]

Q: You post profit on securities sales as a non-operating profit,
instead of an extraordinary gain. Some would say that is done to
pad your pretax profit.

A: In October last year we changed our articles of incorporation to
have our portfolio performance count as part of our business. Our
accountants said that as a core business, we should insert the
gains as an earlier point in our balance sheet, such as at the level
of revenue or operating profit. However, doing so would obscure the
performance of our existing business, so we decided to book it as a
non-operating profit.

Q: The interim operating loss was a result of lower-than-planned
commissions from telecommunications carriers. Is this due to a
structural cause, such as not hitting cellular phone sales targets or
changes in your contracts with the carriers?

A: Each carrier is different, but our deals are structured so our
commissions get a huge boost once we sell more than a certain
number of units -- which we were unable to do. But that is only a
temporary phenomenon. Come April, we will talk with the carriers
and standardize our contracts so our commissions will not change
too much based on unit sales.

Q: Has your high-growth business model faltered?

A: In terms of future cash flow, our stock commissions [through
which Hikari Tsushin collects a portion of each of its customers`
phone bills] are determined by how many subscribers we have, and
at the end of the fiscal year, we will hit our target of 5 million. We
will also have nearly 400 billion yen in unrealized profit from our
investment activities.

Q: Will you be able to go through with the store closures you have
planned for the second half?

A: We will shut down unprofitable shops. We had planned on having
3,000 stores at the end of August, but we are now looking at 2,000.
Excess personnel will be diverted to new businesses.

Q: Your share price is now 30% of the high it set in February. Will
that affect your investment plans or other operations?

A: There will be no direct impact. However, share price is an
indicator of trust, so we will continue to strive to boost our corporate
value.

(The Nikkei Financial Daily Monday edition)

[Anselm_X]

Hi Ikarus,
danke für`s posten! Denke, ich werde mir heute ein paar Hikaris ins Depot legen...

Lucky Trading
Anselmo