The Nova Watch

13 Responses to “The Nova Watch”

1. billy shears on September 29th, 2007 3:18 am

   Interestingly, the share price still plods on in the 40 yen range, even after NHK and the Nikkei informed those market investors who may still have been oblivious to the company’s plight.
   I would have thought that if bankruptcy were so close, the price would have been plummeting to the low-twenties or high-teens by Friday’s close.

2. Ken Worsley on September 29th, 2007 3:30 am

   I’m not sure how to put this politely, but a 40 yen share price is a steaming pile of dogshit. It’s 77% lower than its high from the past 12 months, which was 176 yen on February 13. That’s not a good return.

3. billy shears on September 29th, 2007 1:45 pm

   It’s not such bad dog shit if you bought at 24 yen a few weeks ago…with Friday’s close at 42 you’ve made a whopping 75%. I wouldn’t mind a bit of that sticking to the sole of my shoe, however “steamy” it may be.
   The point is: if the company is really in imminent danger, with a book price valued at near enough to zero (meaning if Nova went bankrupt, with no tangible assets, it’s shares would be worth 0 yen), the share price should still be much lower.
   On the other hand, if Nova can limp through to December, when full sales can start again, they still have a shot at saving their ass. That scenario would be dependent on them being able to produce some kind of media campaign, which possibly some major investor would be willing to bankroll. Nova, however infamous at the moment, is still a brand name in Japan. Through the forgiving tendencies of the Japanese people, many companies have bounced back here even after going through months of public vilification.
   Ken, I tend to think your judgment of the Nova situation may be clouded by some personal enmity towards the company. That wasn’t a good explanation of why the share price is holding at a price that should be much lower if the company is already, as you maintain, doomed.

4. Ken Worsley on September 29th, 2007 4:36 pm

   Vimy/Nokimo/Billy,

   I don’t know how it would be possible for my judgment of the situation to be clouded by any ‘personal enmity towards the company.’ If you have evidence or proof for such an accusation, please show it. Otherwise, I don’t think making groundless personal attacks (while being anonymous) is very polite.

   My analysis stands strong as is, and is not subject to your misguided interpretations.

   I have talked about the possibility of a buyout and how it can be orchestrated, though not here. It certainly could work, and I agree with you on that. I do think, however, that if you’re seeking alpha in a buyout, it is not going to be provided in this case. For the sake of those who work there and have gone unpaid, I hope someone else sees it differently.

   A 77% decline in share value since February 13 is not a good return. When you speak of day trader activity (buying at 24 yen a few weeks ago) and buying as a long-term strategic business investment, those are really two different ball games.

5. Jeremy on September 29th, 2007 5:04 pm

   It is very difficult to say why the stock is even at 40. There are
   so many scenarios that can be taking place. For example, the owner of
   the majority of the shares, Su-whatever his name is, could be
   buying some back and thus keeping the price elevated. This is a
   common technique done by many companies while they are going down the
   drain. Yamaichi Shoken did the same about 10 years ago.
   There are countless other possibilities. The troubling thing about
   Nova is that they don’t seem to have too many hard assets. Although
   I have not researched this point well.

6. Garrett on September 29th, 2007 6:56 pm

   Vimy/Billy,

   You appear to be looking at share price in a vacuum. Yes, the share price is above zero. And yes, it enjoyed bump, but what of the nonpayment or late payment of employees, the selling off of real estate, the closures, the debt, the obfuscation? Don’t you see the pattern here? There’s nothing new or shocking in this.

   Take a look at other stocks, too - below 100 things sometimes defy logic. Maybe Jeremy’s right, I don’t know, but there’s not much reason to see a light at the end of this tunnel for Nova. They still have only a few days to explain all those missing shares or risk being delisted by JASDAQ, which is not a great step in their return.

   Maybe a miracle will come, it would be nice, but it’s so unlikely as to be not something I’d spend much time on.

7. Ken Worsley on September 29th, 2007 8:42 pm

   Jeremy,

   Here’s the balance sheet: http://ir.nikkei.co.jp/irftp/data/tdnr2/home/oracle/161/2007/181803e/181803e0.pdf

   A quick roundup of financials:

   • Nova lost about 3.07 billion yen in net profit for financial 2006 (consolidated).
   • Nova lost about 2.50 billion yen in net profit for financial 2007 (consolidated).
   • Nova lost about 2.50 billion yen in net profit in the first quarter of financial 2008 (April-June 2007).
   • During that first quarter of financial 2008, Nova lost 4.5 billion yen in operating profit. It had to sell off over 9 billion yen in assets in order to ‘earn’ that loss of 2.5 billion yen in net profit.
   • That quarterly report covered April-June 2007. The sanctions imposed by the Ministry of Trade, Economy and Industry went into effect on June 14 and last until December 14.
   • The selloff of about 9 billion yen in assets from April-June 2007 meant that the value of Nova’s assets on July 1 was 16.4% less than a year ago. It also had zero (0) yen in securities listed on its balance sheet. Convertible assets (cash or cash equivalents) were down over 30% from the year before.

   And Nova owes 5 billion yen in refunds to customers.

8. Ken on September 30th, 2007 6:03 pm

   Garrett,

   Here is JASDAQ’s warning to NOVA: http://www.jasdaq.co.jp/other/kaizenhoukokusho4655_190921.jsp

   JASDAQ wants to see an effective improvement plan outlining how management will make clear disclosure of what’s going on with the firm’s business and stock transactions. Given Nova’s lack of skills in disclosure, I can’t see them having an easy time being persuasive in their response.

   If Sahashi (or Nova Kikaku) has the cash, I would imagine they are trying to buy up shares in an effort to ‘take NOVA private’.

   On September 21, UBS AG unloaded 11.85% of the company’s shares on the market…that is just over - ahem - 8 million shares. Sound familiar?

   Since then we have seen much lower trading volume. I think most market players are sitting on NOVA, not wanting to take a chance that they are delisted and they’re left holding what has essentially become an undeliverable commodity come to term.

9. Jeremy on September 30th, 2007 7:36 pm

   There is not much to say to those posts. If you look at those
   numbers, nobody in his/her right mind would inject money into that
   company. It is just impossible for them to keep going on much longer.
   The meglomaniac owner probably will not declare bankruptcy
   and it will complicate everything.

10. Sean Brown on October 3rd, 2007 9:43 am

    Nova employees are being evicted from their apartments:

    http://www.letsjapan.org/?q=sankei-news-nova-fails-to-pay-rent-after-deducting-it-from-instructor-salaries.html

    How can they do this? Now Nova is just stealing it’s employees rent money as well???

11. Danny B on October 5th, 2007 3:12 pm

    Man, being an employee of the company at the moment this information is beyond scary and greatly informative. There are so many rumors and little factual information to rely on. I must say though that the company itself is hugely dependent on the vast income accumulated by the large sums of rent money withheld from employee paychecks. This no interest loan the company has acquired from its employees is nothing short of criminal. I have heard of some evictions, but no first hand accounts. Having moved out of Nova housing I can say that what they charge for rent and utilities is appalling. And that doesn’t even take into account the so called “reasonable” conditions of a lot of these apartments. I really hope that the 15th comes and goes quietly for I fear a mutiny of epic proportions.

12. anonymous on October 13th, 2007 10:32 pm

    Here’s a first hand account: We work in Saitama and are getting evicted. We have to be out by the end of October. According to the man at Accomodations, our arguments about us having paid the rent and still getting evicted are groundless, in the sense that the money we pay “isn’t earmarked for our landlords”. Instead, “it goes into a big pool of money from which many different things are paid.”

    well, I’ll be god damned!

    If only we’d had it put this way when we’d signed up!

    Of course, they have no problem with putting us in an apartment with higher rent. To this we adamantly reply - “not going to happen” - to be kicked out and forced into a new apartment, and to be charged more after fully understanding that the money we are being charged isn’t going to the landlord anyway.

    Of course, I doubt we’ll get paid at all - and so in that sense the rent money isn’t coming out of our pockets but out of our non-existent salaries. What beauty and genius.

    Sincerely,

    soon-to-be-homeless

13. Mutantfrog Travelogue » Blog Archive » Why is Berlitz thriving? on February 24th, 2009 5:03 am

    […] eventual collapse of former industry giant NOVA (so carefully documented by the Japan Economy News blog) shattered the image of a once booming industry and, with the disappearance of the well-known NOVA […]

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