* * * * * * * * * T E R R I E 'S T A K E * * * * * * *<br>A weekly roundup of news & information from Terrie Lloyd.<br>(<a href="http://www.terrie.com">http://www.terrie.com</a>)<br><br>General Edition Sunday, May 23, 2010 Issue No. 566<br>
<br>+++ INDEX<br><br>- What's New<br>- News<br>- Candidate Roundup/Vacancies<br>- Upcoming Events<br>- Corrections/Feedback<br>- News Credits<br><br>SUBSCRIBE to, UNSUBSCRIBE from Terrie's Take at:<br><a href="http://mailman.japaninc.com/mailman/listinfo/terrie">http://mailman.japaninc.com/mailman/listinfo/terrie</a><br>
<br>BACK ISSUES<br><a href="http://www.japaninc.com/terries_take">http://www.japaninc.com/terries_take</a>, or,<br><a href="http://mailman.japaninc.com/pipermail/terrie/">http://mailman.japaninc.com/pipermail/terrie/</a><br>
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<br>------------- PBXL is Business Communications -------------<br><br><br>+++ WHAT'S NEW<br><br>Last week a leading manufacturer of photo processing <br>machines, Noritsu Koki, announced that it would buy out the<br>
operations of a Tochigi-based telemedicine company called <br>Doctor NET (<a href="http://www.doctor-net.co.jp">www.doctor-net.co.jp</a>) for the surprisingly high <br>price of JPY5bn (US$55m). Certainly not the megabucks that<br>
Internet companies in the USA spend to buy each other out, <br>but still an excellent price for a home-grown business with <br>sales of just JPY2.1bn (US$23m) and net profit of an even<br>more modest JPY195m (US$2.145m), oh, and assets of around <br>
JPY900m. The founder and president of Doctor Net would have<br>been particularly happy with the opportunity to see the <br>payment for his 45.4% which Noritsu Koki will buy next <br>month. The remainder is held by savvy investor firms <br>
SoftBank Investment Holdings and Mitsui, amongst others, and<br>will be purchased later.<br><br>Whenever we hear about deals like this in Japan, we always <br>get interested, because the numbers are so out of keeping <br>
with what's normal. In this case, a valuation of almost 20 <br>times the earnings (and after removing the value of stated <br>assets) is as high as or even higher than what Doctor Net <br>would have received for a public listing in the current<br>
market environment, BUT without the costs of doing an IPO. <br>If Doctor Net's profits were increasing prodigiously we'd <br>see the point, but here is a company that has had the same <br>10% profit margin for the last two years.<br>
<br>So what does Doctor Net do that makes it worth so much <br>money? Firstly it operates a remote analysis, diagnostics, <br>and image storage/management business, that makes it <br>possible for hospitals and physicians to get their x-rays <br>
and MRI/CT scans processed and reviewed at a remote <br>location and if needed can have them diagnosed by one of <br>Doctor Net's many contracted radiologists. Secondly, <br>because the turnaround is so much quicker, client hospitals <br>
can process more patients and make more money. In fact, in <br>this age of cost cutting due to the Japanese government's <br>continuing cutbacks, Doctor net helps radiology departments<br>actually increase their income.<br>
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[...Article continues]<br><br>As a result of this value proposition, a most compelling <br>one in our view, the company's sales rose a strong 30% in <br>FY2009 over FY2008. Noritsu Koki says that they will<br>figure out a way to tie in their photo processing machines<br>
to the Doctor Net services -- but this is unlikely to <br>happen because typically Doctor Net allows clinics to have <br>less equipment, not more. <br><br>Rather, the real value, which Noritsu Koki has also said <br>is there, is in the fact that this highly proven and valued<br>
radiology expertise consolidation system is ideal for <br>developing countries such as China and SE Asia, and can be<br>grafted on to Noritsu Koki's distributor network. That is <br>to say, Doctor Net is most likely a backdoor escape for <br>
Noritsu Koki from a rapidly declining market in image <br>processing -- just like Fuji Film has been forced to pursue<br>alternative business by buying out pharmaceutical <br>companies.<br><br>Indeed, if you look at Noritsu Koki's P&L over the last 3 <br>
years, the picture for their legacy business of photo <br>processing machines is really ugly and getting uglier by <br>the day. In the parent company only, FY2007 sales were <br>JPY37bn and pretax profit was JPY1.4bn, then in FY2008 the <br>
sales fell 30% to JPY27bn and losses soared to 2.5bn.<br>Most recently, this March the FY2009 results were sales of <br>just JPY1.9bn, 30% down again, and losses of a massive <br>JPY4.9bn! These guys don't have much time to turn their <br>
ship around before they will run out of cash. So it's easy <br>to see how they are clutching at the Doctor Net straw. <br><br>Only time will tell if Doctor Net will actually save <br>Noritsu Koki. Our bet is it won't because Noritsu Koki<br>
appears to have the same problems as Fuji Film has had, but<br>has taken 5 long years more to do something about it. While<br>Doctor Net's remote medical support business on the face of<br>it seems quite sound and there are 131 contracted <br>
radiologists on the network helping over 199 medical <br>facilities to reduce costs, nonetheless, the profits are just <br>10% AND the company has actually been grinding away since <br>1995 (when operations started, the firm itself wasn't set <br>
up until 2002), so it seems that it has only recently <br>started to hit its stride.<br><br>Because Doctor Net is private, we can't tell if their <br>profit curve is going up or is constant, but at least for <br>the FY2008 year, on sales of of JPY1.6bn the net profit <br>
was JPY168m, still around 10% -- so this is not a <br>tremendously lucrative business. Nonetheless, the recent <br>financial downturn appears to have been a big catalyst for <br>hospitals to turn to Doctor Net, so maybe their time has <br>
come. The question is: will Noritsu Koki's international <br>network allow it to translate the service into business <br>in other countries, and more importantly, can it do this <br>quickly enough?<br><br>Noritsu Koki's shareholders seem to think it's a good move <br>
and the stock price rose a bit on the news. But our take <br>is that where an extraordinary price is being paid by a <br>company that just recently fired its CEO, there is either <br>some shenanigans going on or they are really desperate. <br>
In other words, where there is smoke there is fire. We <br>think investors will get their fingers burned.<br><br><br>...The information janitors/<br><br>***------------------------****-------------------------***<br><br>------------- Stay Healthy with Manuka Honey --------------<br>
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<br>- Rakuten buys Buy.com<br>- Filipino numbers<br>- 114,000 animals to be culled in Miyazaki<br>- FY2008 household income lowest in 20 years<br>- Cosmetic sales down<br><br><br><br>-> Rakuten buys Buy.com<br><br>Rakuten is taking on the big boys in the USA with its <br>
purchase this last week of ecommerce firm Buy.com for a <br>reported US$250m in cash. In making the purchase, Rakuten <br>will be taking on Amazon, eBay, and Walmart in competing <br>for online customers. ***Ed: Given that Buy.com is only a <br>
minor player with 14m registered users, one wonders if <br>Rakuten is up to the challenge of turning the company <br>around and significantly growing its market share? Rakuten <br>says it will use the Buy.com site to implement it's own <br>
two-layer business model of both individuals and companies <br>being able to offer products for sale online, versus <br>Buy.com offering only corporate products. We wonder if <br>buyers have the same mindset when they purchase? Somehow <br>
we doubt it.** (Source: TT commentary from <br><a href="http://edlconsulting.com">edlconsulting.com</a>, May 21, 2010)<br><br><a href="http://tinyurl.com/259lu32">http://tinyurl.com/259lu32</a><br><br>-> Filipino numbers<br>
<br>An interesting article from a Filipino publisher shows that<br>the downturn in the economy coupled with changed <br>immigration rules some years ago has significantly reduced <br>the number of Filipinos living and staying in Japan. It <br>
points out for example that changes in immigration rules in<br>2005, primarily limiting the number of entertainers who <br>could enter the country, has resulted in Filipino NEW <br>entrants to Japan dropping from 42,633 that year to 8,867 <br>
in 2007, and just 6,555 in 2008. As a result, the number of<br>permanent residents entering Japan in 2009 were 5,278 <br>people, well down from the 8,806 people in 2007, and of <br>these, the number of Filipinos to marry Japanese were 4,142<br>
in 2008, down from 6,114 in 2007. ***Ed: We can see all <br>kind of implications here, not least of which is that <br>Japan's birthrate certainly won't be helped by the fall in <br>international marriages.** (Source: TT commentary from <br>
<a href="http://abs-cbnnews.com">abs-cbnnews.com</a>, May 22, 2010)<br><br><a href="http://tinyurl.com/2922rak">http://tinyurl.com/2922rak</a><br><br>-> 114,000 animals to be culled in Miyazaki<br><br>Japan's wagu beef industry is facing a catastrophe as it <br>
has emerged that some of the nation's top breeding animals <br>will be amongst the 114,000 cattle and pigs that will be <br>killed to eradicate an outbreak of foot-and-mouth disease <br>in the prefecture. Foot-and-mouth is extremely contagious <br>
and appears to be rapidly spreading through the area on the<br>feet of visitors and locals. The government has declared a <br>state of emergency for Miyazaki and says that 126 farms are<br>affected and these will lose all of their animals to the <br>
cull. ***Ed: No word yet as to whether the meat will be <br>resold to consumers but there was discussion about it!!!<br>OK, foot-and-mouth is apparently not harmful to humans, but<br>would you eat an infected animal? Thought not.** (Source: <br>
TT commentary from <a href="http://yomiuri.co.jp">yomiuri.co.jp</a>, May 19, 2010)<br><br><a href="http://www.yomiuri.co.jp/dy/national/T100518004628.htm">http://www.yomiuri.co.jp/dy/national/T100518004628.htm</a><br><br>
-> FY2008 household income lowest in 20 years<br><br>Government statistics take a while to move through the <br>system, and the Ministry of Labor has just released the <br>results of a 2009 income survey it conducted to assess <br>
household incomes for the previous year (fiscal 2008). The <br>survey found that the average household income fell to <br>JPY5.47m (US$60K), well down from the peak of JPY6.64m back<br>in 1994, and in fact the lowest level since 1988. <br>
Seniors-only household income was JPY2.97m, and for <br>households with children it was JPY6.88m. The number of <br>workers per household fell to 1.31 people, meaning that <br>moms have been having trouble finding work and that the <br>
primary breadwinner is earning an average of JPY4.17m. <br>58.1% of households said that life was getting "tough" and<br>24.9% said it was "extremely tough". (Source: TT <br>commentary from <a href="http://nikkei.com">nikkei.com</a>, May 21, 2010)<br>
<br><a href="http://e.nikkei.com/e/ac/tnks/Nni20100520D20JFA19.htm">http://e.nikkei.com/e/ac/tnks/Nni20100520D20JFA19.htm</a><br><br>-> Cosmetic sales down<br><br>You know that things are difficult for consumers in Japan <br>
when women start cutting back on cosmetics. The Ministry <br>of Economy, Trade, and Industry (METI) has announced that <br>domestic shipments of cosmetics fell 8% on the year to <br>JPY1.4trn (US$15.4bn) in 2009. Perfumes and high-end <br>
products were hardest hit, and the industry trend appears <br>to be for women to be buying cheaper products and looking <br>after the basics (skin-care product sales were less <br>affected). ***Ed: Much like clothing, the cosmetics <br>
industry is ready for a high-quality, high-volume, low-cost<br>retailer like Uniqlo to move in and take over. While there <br>have been some attempts, the value proposition just hasn't <br>been compelling enough and the retail store experience has <br>
been missing -- cosmetics makers don't seem to like running<br>their own stores. But we're sure that will change over the <br>next year or two.** (Source: TT commentary from <a href="http://nikkei.com">nikkei.com</a>,<br>
May 20, 2010)<br><br><a href="http://e.nikkei.com/e/ac/tnks/Nni20100520D20HH929.htm">http://e.nikkei.com/e/ac/tnks/Nni20100520D20HH929.htm</a><br><br><br>NOTE: Broken links<br>Many online news sources remove their articles after just a<br>
few days of posting them, thus breaking our links -- we<br>apologize for the inconvenience.<br><br>***------------------------****-------------------------***<br><br>----------- Making Web Sites More Affordable --------------<br>
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<br><br>***------------------------****-------------------------***<br><br>+++ CANDIDATE ROUND UP/VACANCIES<br><br>=> BiOS, a Division of the LINC Media group, is actively <br>marketing the following positions for customers setting up <br>
or expanding in Japan, as well as other employers of <br>bilinguals.<br><br>** HIGHLIGHTED POSITION(S)<br><br>BiOS is currently looking for an experienced coordination <br>manager to work onsite at our client's Hachioji office, <br>
overseeing two teams and a total of 11 people, ensuring the<br>effective and efficient delivery of Level 1 Support and <br>Data Center Contact Services to our client’s customer <br>base. Working as the main bridge between the ground level <br>
service delivery teams and the business management areas <br>of the client, this is a challenging role requiring <br>excellent organizational and interpersonal skills to <br>leverage the full potential of your teams and deliver <br>
excellent services that match client expectations.<br><br>This is a challenging and rewarding role, requiring <br>experience in managing teams of people, as well as <br>reporting on service levels, client and end-user <br>
management interaction, and incident management. The ideal <br>applicant will have a cool head in stressful situations, a <br>farsighted outlook that extends past their desk and today, <br>and the desire to work in the fast-paced and exciting <br>
environment of the worlds biggest IT services vendors.<br><br>Remuneration is JPY5m – JPY7m depending on your experience <br>and level.<br><br>** POSITIONS VACANT<br><br>- Jnr Sales Rep, Plastics Manuf, Ebina, JPY4m – JPY6m<br>
- Lvl 1 Hardware Support, Global Vendor, JPY3m – JPY4.5m<br>- Data Centre Contact Rep, Global Vendor JPY3m – JPY4m<br>- FileNet Architect, European Insurance co., JPY6m – JPY7.5m<br>- Unix Engineer, Okinawa I-Bank, JPY4m – JPY5m<br>
<br>Interested individuals may e-mail resumes to:<br><a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a><br><br>** BiOS Job Mail<br><br>Every 2 weeks BiOS sends out a regular communication to its<br>job seeking candidates, called BiOS Job Mail. Every edition<br>
carries a list of BiOS's current and most up-to-date<br>vacancies, with each entry featuring a short job<br>description and a direct link to the main entry on the BiOS<br>home page. Regardless of whether you are unemployed and<br>
searching, thinking about a career change, or just curious<br>to know if there is something out there that might suit you<br>better, the BiOS Job Mail newsletter is an easy and<br>convenient way for you to stay informed. If you would like<br>
to register for the BiOS Job Mail, or to find out more,<br>please email <a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a>.<br><br>Interested individuals may e-mail resumes to:<br><a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a><br>
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<br><a href="http://www.cch-japan.jp">www.cch-japan.jp</a><br><br>-----------------------------------------------------------<br><br>***------------------------****-------------------------***<br><br>+++ UPCOMING EVENTS/ANNOUNCEMENTS<br>
<br><br>Surprisingly, no events to report this week!<br><br><br>***------------------------****-------------------------***<br><br>+++ CORRECTIONS/FEEDBACK<br><br>In this section we run comments and corrections submitted<br>
by readers. We encourage you to spot our mistakes and<br>amplify our points, by email, to <a href="mailto:editors@terrie.com">editors@terrie.com</a>.<br><br>*** In TT-563, April 27th, we tried to figure out what is <br>going on in the Carbon Trading game globally, given that <br>
the Japanese are still very gungho in buying up carbon <br>credits, even as Australia has pulled back and put off <br>setting up an ETS (a carbon credit trading system). <br><br>*** Reader:<br><br>I am concerned there will be a monopoly on carbon emission <br>
rights, purchased by the first world (i.e. buying the <br>rights from the third world). The current trend will likely<br>give the third world a massive short term cash flow <br>injection but the transfer of rights will prevent them from<br>
expanding economically via a path of industrialization. I <br>doubt new technologies will be introduced at a pace much <br>faster than they currently are. Although there will be much<br>fanfare and promotion of new technologies, price and <br>
implementation will be cost and time intensive.<br><br>As a result, this will all probably lead to preservation of<br>the current world economic order as it is today for quite <br>some time if implemented.<br><br>FYI, check these interesting links about the whole global <br>
warming controversy:<br><br><a href="http://blogs.telegraph.co.uk/news/jamesdelingpole/100017393/climategate-the-">http://blogs.telegraph.co.uk/news/jamesdelingpole/100017393/climategate-the-</a><br>final-nail-in-the-coffin-of-anthropogenic-global-warming/<br>
<br><a href="http://www.youtube.com/watch?v=DNbxYVa2VjA">http://www.youtube.com/watch?v=DNbxYVa2VjA</a><br><br>***********************************************************<br>END<br><br>SUBSCRIBERS: 9,111 as of May 23rd, 2010<br>
(We purge our list regularly.)<br><br>+++ ABOUT US<br><br>STAFF<br>Written by: Terrie Lloyd (<a href="mailto:terrie.lloyd@japaninc.com">terrie.lloyd@japaninc.com</a>)<br><br>HELP: E-mail <a href="mailto:Terrie-request@mailman.japaninc.com">Terrie-request@mailman.japaninc.com</a><br>
with the word 'help' in the subject or body (don't include<br>the quotes), and you will get back a message with<br>instructions.<br><br>FEEDBACK<br>Send letters (Feedback, Inquiries & Information) to the<br>
editor to <a href="mailto:terrie.lloyd@japaninc.com">terrie.lloyd@japaninc.com</a>.<br><br>ADVERTISING INFORMATION<br>For more information on advertising in this newsletter,<br>Contact <a href="mailto:ads@japaninc.com">ads@japaninc.com</a>.<br>
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<br>J@pan Inc is Japan's only independently published English-<br>language business website. Authoritatively chronicling <br>online the business trends in Japan, each posting brings <br>you in-depth analysis of business, people and technology in<br>
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