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The Collapse of Hikari Tsushin

Posted By Barry Ritholtz On January 18, 2006 @ 6:15 pm In Markets | Comments Disabled

Joanie redux:

"A sharp eyed reader reminded me about the March 10, 2000 collapse of Hikari
Tsushin (#9435), a Japanese internet thingy that imploded under fraud allegations and took the Nikkei down along
for the ride. Not too long afterwards, the Western markets followed suit.

So why is this germane?

Because [Monday] night, Japanese authorities raided a listed firm called Livedoor (another high-profile Internet company), looking
for violations of securities regs. The Nikkei responded by having the largest fall in more than a year (-2.84%).

you can make your own judgment as to if this is a one-night stand or if it bodes for something more along the lines
of Hikari Tsushin. We note, too, that other names with the same biz model as Livedoor, i.e., rapid growth thru
splits and M and A, were given short shrift last night as well.

So there’s a hint, eh? Anyhow, just thought I’d
mention this because the situation is analogous . . .

This and the prior post [1] on Japanese Internet companies being raided are examples of ow some unforeseen factor can be the spark that starts the fire . . .


UPDATE: January 19, 2005 6:45am

The NYT [2] asks :

Is the Japanese establishment out to destroy an upstart who had the gall to try hostile takeovers and expand aggressively through acquisitions? Or is Takafumi Horie simply a 33-year-old crook who fooled investors with fake numbers?

A trader at work at the Tokyo Stock Exchange early Thursday. Though the market turned higher, analysts watched warily — fearful that the losses could resume, causing financial and even some economic damage.

Whatever the reality, a raid by prosecutors on the offices of the Livedoor Company in Tokyo set off something akin to panic among Japanese investors yesterday, sending share prices sharply lower and forcing the Tokyo Stock Exchange to close early.


Rocking the Boat in Japan
NYT, January 19, 2006

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2006/01/the-collapse-of-hikari-tsushin/

URLs in this post:

[1] prior post: http://bigpicture.typepad.com/comments/2006/01/east_meets_west.html

[2] NYT: http://www.nytimes.com/2006/01/19/business/worldbusiness/19place.html?ex=1295326800&en=9084dbdff5fc19bf&ei=5090&partner=rssuserland&emc=rss

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