Share sales by Seiko Epson Corp, Japan's largest maker of inkjet printers, and NEC Electronics Corp, the chipmaking subsidiary of NEC Corp, may signal investors are once again eager to buy electronics stocks.
Seiko Epson on Monday sold ?120 billion (US$1 billion) of shares at the maximum price it and eight shareholders sought. NEC Electronics and NEC said this week they aim to raise as much as ?127.5 billion by reviving an initial public offering they shelved earlier this year.
The sales, two of the world's three biggest IPOs this year, highlight a recovery in Japanese electronic stocks. The Topix Electric Appliances Index of 151 computer, chip and consumer-electronics makers has risen by a fifth since late April after a two-thirds slide since the end of 1999. In the US, the NASDAQ Composite Index has climbed 25 percent this year, led by companies such as Intel Corp, which has gained 40 percent.
"The worst is over for the tech industry," said Koshi Kumagai, a senior fund manager at HSBC Asset Management who intends to buy shares in both NEC Electronics and Seiko Epson.
"Companies globally tightened their budgets too much. They have to start spending sometime," he said.
Combined, the share sales by NEC Electronics and Seiko Epson will triple the total raised in initial public offerings in Japan this year to US$3.1 billion, or about one-third of the global total.
Depending on the exchange rate and the size of the sale, NEC Electronics could be the world's largest IPO, unseating Australia's Promina Group Ltd, which raised A$1.9 billion (US$1.3 billion) earlier this year.
Tokyo-based NEC Electronics will issue 23.5 million new shares, while parent NEC will sell 10.5 million shares it holds in the subsidiary, with an option to sell 3 million more if demand from investors proves strong enough.
The timing of the sales in Seiko Epson and NEC Electronics, both of which make electronic components, is no coincidence.
Japan's benchmark Nikkei 225 Stock Average has gained 16 percent since May 1; the 17-member Philadelphia Stock Exchange Semiconductor Index has risen 14 percent in the same period.
Seiko Epson, based in central Japan, had been considering a public offering for two years. NEC Electronics postponed its share sale in February on concern Japan's slumping stock market would limit demand.
"The timing is favorable for investors," Kumagai said. "Their share prices will probably go up after the IPO."
Seiko Epson and NEC Electronics are also riding a rebound in computer-related spending and sales of digital consumer products.
NEC Electronics said this week it expects net income to almost triple to ?26 billion in the year ending next March from ?9.6 billion a year ago because of stronger demand for chips used in digital consumer electronics such as DVD recorders.
Industrywide, sales of digital cameras will probably rise by about a quarter this year to ?1.1 trillion from ?880 million last year, Merrill Lynch Japan Securities analyst Richard Kaye predicted last month.
NEC's chips are found in devices such as digital cameras, automobile components and game consoles.
Seiko Epson and NEC aren't alone in trying to capitalize on the shift in investor sentiment toward technology companies.
Livermore, California-based FormFactor Inc, a maker of chip-testing equipment, raised US$84 million in an initial offering last week, the first by a US technology company this year.
Other Japanese chipmakers are also considering initial public offerings to meet growing investment needs and to tap renewed investor sentiment for computer-related companies.
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