Internet Initiative Japan Reports Strong Q3 Results, Boosts Full Fiscal Year Targets (IIJI)

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Internet Initiative Japan (IIJI) , one of Japan's leading Internet access and comprehensive network solution providers announced its third quarter results after the Tokyo Stock Exchange closed Friday. Revenue increased y-o-y by 15.4% to 11.87 billion yen (US$100.7m) , Operating Income increased y-o-y by 68.4% to 691 million yen (US$5.9m), and Net Income increased y-o-y by 80.3% to 1.19 billion yen (US$10.1m). IIJI raised its full fiscal year targets for revenue and net income announced Nov. 9, "due to the steady increase in outsourcing and systems integration ("SI") projects." IIJI now forecasts that revenue will increase by 3.6% to 48 billion yen and net income will increase by 18.9% to 4.4 billion yen. The target for operating income is unchanged.

The following are statements directly from IIJI's 3rd quarter financial results and business summary.

"In December 2005, we listed on the Mothers market of the Tokyo Stock Exchange ("TSE")," said Koichi Suzuki, President and CEO of IIJ. "Back in August 1999, we became the first Japanese company to list on NASDAQ without a domestic listing, and now six years later, we are very pleased to list in the market that also shares our major customer base. This marks the first quarterly financial results announcement since our listing in Japan, and we are quite satisfied with the continued progress that we have been making. For the quarter, we recorded significantly higher revenue and income compared to the same period last year. This was mainly due to continued revenue growth from outsourcing services and systems integration projects, and is largely a reflection of expanding corporate investment in Japan for information technology and network systems. We believe that this positive business climate will continue in the fourth quarter and as a result, we have raised our guidance accordingly."

"During the quarter, we also experienced several significant business developments," continued Koichi Suzuki. "From a service standpoint, we enhanced our security service line-ups that cater to various corporate customers. In October 2005, we announced our plans to launch two main services. First, we introduced the "IBPS Database Security Assessment Service" to evaluate the vulnerability of internal corporate databases and to prevent the risk of tampering or information leaks. The second was the "IIJ DDoS Solution Service," which protects corporate network systems from large scale external cyberattacks. In November 2005, we introduced the "IIJ Quarantine Network Solution" service to check, isolate, treat, disinfect and delete any computer that is improperly connected to a corporate network. In addition, our SEIL Management Framework ("SMF"), a proprietary network management system that controls routers at customer sites from a central location, was steadily provided to more vendors, including Oki Electric Industry Co., Ltd. and NTT Communications Corporation, on an Original
Equipment Manufacturing ("OEM") basis. As our progress with these developments demonstrates, we continue to try to increase revenues from higher-margin outsourcing services, such as our various value-added services, by adapting new technologies into products."

"From a business standpoint, we are happy to report that we established a joint venture with Konami Corporation ("Konami") called "Internet Revolution Inc." (or "i-revo") that would operate comprehensive Internet portals. We will provide a safe and secure networking environment while Konami will use its expertise in digital entertainment content development to provide customers with what we believe will be an innovative new online experience."

IIJI's shares ordinary shares trading on the MOTHERS market of the Tokyo Stock Exchange (ticker: 3774) closed Friday ahead of the earnings release up 0.57% at 527,000 yen (US$4,504 at Y117/US$1). Its ADRs were initially issued at a ratio of 2,000:1 but now appear to be closer to 400:1. At the time of publishing this post ADR:IIJI was trading up 10.96% at $12.15.

Click here for more details of IIJI's Q3 financials .

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Tagged: , Internet Service Providers, Japan
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