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DoCoMo Shares Fall to Lowest Since 1998 on Forecast: Tokyo Mover

NTT DoCoMo Inc. (9437), Japan’s largest mobile-phone company, fell to the lowest level in 14 years in Tokyo trading after cutting its annual profit forecast as competitors lured customers with Apple Inc.’s iPhone 5.

DoCoMo dropped as much as 4.7 percent to 117,600 yen, heading for lowest since the stock began trading in 1998, and was at 118,100 yen as of 9:48 a.m. It was the biggest decline in Japan’s benchmark Nikkei 225 Stock Average, which rose 0.2 percent. The company cut its projection for net income this fiscal year by 9 percent to 507 billion yen ($6.4 billion) on Oct. 26, and lowered its estimate for new subscribers to 2 million from 2.8 million.

The carrier, which doesn’t offer the iPhone, is increasing sales promotions, President Kaoru Kato said last week. Tokyo- based DoCoMo will also introduce 11 handsets next month that work on a faster network, using Long Term Evolution technology, to regain market share from smaller KDDI Corp. and Softbank (9984) Corp., which began selling the iPhone 5 last month.

“DoCoMo needs to show how it’s going to revive profit in the medium term,” Daisaku Masuno, an analyst at Nomura Holdings Inc., said in a report dated Oct. 26, cutting his price estimate for the stock by 8 percent to 121,000. “The sales promotion burden is rising because of price cuts for LTE fees and Android handsets.”

For the three months ended September, DoCoMo reported a 13 percent decline in net income to 121.6 billion yen as revenue rose to 1.14 trillion yen from 1.07 trillion yen.

Additional promotional expenses for the year will probably total 80 billion yen, Kato said Oct. 26.

Softbank, KDDI

DoCoMo’s rivals have turned to acquisitions as part of their strategy to drive growth as they foresee the domestic market slowing down. Softbank, the third-largest wireless services provider, announced a $20 billion investment in U.S.’s Sprint Nextel Corp. on Oct. 15. KDDI and Sumitomo Corp. offered as much as 216 billion yen on Oct. 24 to buy out Jupiter Telecommunications Co., Japan’s biggest cable-TV operator.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably total 820 billion yen this fiscal year, compared with an earlier projection of 900 billion yen, DoCoMo said last week. Annual revenue may total 4.52 trillion yen, an increase from the 4.45 trillion yen forecast in July, the company said.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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