Cisco Japan will probably rumble in its Nasdaq Japan debut next month, but don't double count on it.

Back to Contents of Issue: May 2000
by Yoko Shibata
In June, Cisco's Japanese subsidiary is scheduled to list on Nasdaq Japan. The US parent company, which lists on the US Nasdaq, already enjoys a huge market capitalization, but the Japanese subsidiary is expected to fetch a market cap of ¥18 to ¥21 trillion, topping that of Softbank and approaching the level of NTT. PeopleSoft, too, is trying to cash in on Japan's high-tech investment boom; its subsidiary is scheduled to list on Nasdaq Japan sometime this year.

Meanwhile, IBM, Microsoft, and Intel don't let their subsidiaries list in Japan on the grounds that it's double-counting the company's value. Oracle Japan, which listed on the TSE last February, has a market cap of ¥7 trillion, which accounted for 40 percent of Oracle's market cap; however, Oracle Japan's revenue contributed only 10 percent to the parent company's.

Market analysts project the market cap of Cisco Japan thus: Cisco's market cap is 2.5 times larger than that of US Oracle, and 5.1 times that of US Yahoo. Both Oracle Japan and Yahoo Japan are listed on the OTC and have market caps of ¥7.3 trillion ¥4.3 trillion, respectively. ¥7.3 x 2.5 = ¥18.3 trillion, and ¥4.3 trillion x 5.1 times = ¥21 trillion, so market watchers say Cisco Japan's market cap will be from ¥18.3 trillion to ¥21 trillion, giving it the third-largest market cap in Japan, after NTT DoCoMo (¥36 trillion) and NTT (¥25 trillion). Softbank is at around ¥18 trillion.

To ensure a successful launch next month, the new exchange has been soliciting the big US tech companies.

IBM won't let its Japanese subsidiary list in Japan as there would be, it feels, a conflict of interest between the shareholders of the US head office and shareholders of the Japanese subsidiary. Microsoft has the same policy, saying the value of the corporation would be double counted, which would be misleading for investors. It feels a parent company's value should be determined on a consolidated basis, and says listing the parent company in the US and the Japanese subsidiary in Japan means double counting the corporate value. NCR will shortly delist NCR Japan from the TSE First Section and turn it into a wholly owned subsidiary, meaning its value too will be determined on a consolidated basis.

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