Strong earnings were priced in given recent strength in retaining subscribers. KDDI understandably left its full year forecast in place projecting a lower y-o-y net profit on higher revenue. However, that does allow it to raise its forecast this autumn if number portability is not as severe as anticipated. Its shares by the way lost 2.15% on the day.
Shares of NTT DoCoMo (NYSE:DCM) (Tokyo: 9437) are trading near an all-time low and could obviously go lower if it too voices concerns about number portability when it reports earnings on Friday, July 28th. DoCoMo's ordinary shares lost 0.60% Friday in Tokyo.
Softbank Corp (OTCPK:SFTBF) (Tokyo: 9984) has experienced nearly a complete reversal giving up most of the gains from its multi-year share price peak early this year. The market doesn't seem to be buying the synergies of Softbank and Yahoo! Japan (Tokyo: 4689) as they would be applied to the former's acquisition of Vodafone Japan. I am also becoming increasingly doubtful of how much impact Softbank will have against its much larger rivals. And the financing of the multi-billion dollar acquisition seems to be really straining the firm and worrying analysts. Softbank's ordinary shares lost 2.86% in Friday trading in Tokyo.
It is hard to ignore the mammoth cellular phone industry in Japan that has more than 90 million subscribers among a population estimated in the 120-130 million range. As we all know however, that much saturation means adding new subscribers is forever challenging as is boosting margins. That being said, I believe the best play if there is one, is NTT DoCoMo since it's already trading down and it has been buying back shares at these "low" levels and could increase its dividend. I wouldn't expect any big jumps overnight unless DoCoMo comes out with a bullish forecast. An upside earnings surprise next Friday seems unlikely. At any rate, holding on to shares into the new year could be a nice play on an expected stronger yen going into 2007.