JIN-185 -- Martha Stewart and General MacArthur -- Two of a Kind

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 185
Wednesday, June 19, 2002


++ Viewpoint: Martha Stewart and General MacArthur -- Two of a Kind

++ Noteworthy News
- Bank Regulators Tell Mizuho to Get Its Act Together
- S&P Upgrades JAS, Says ANA at Risk of Downgrade
- E*Trade Japan Punished for Questionable Orders

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++ VIEWPOINT: Martha Stewart and General MacArthur -- Two of a Kind

Likening Martha Stewart to General Douglas MacArthur may seem like a
stretch, but writer Roland Kelts does a skillful job of it in his
feature "Martha, Wal-Mart and the Next American Invasion" in the July
issue of J@pan Inc, which hits bookstores on Tuesday.

Like MacArthur, Stewart is becoming a person more at ease abroad than
at home. At home, Stewart has watched her partner K-Mart collapse,
she's fought the publication of a nonauthorized (and definitely not
flattering) biography entitled Martha Inc., and now her stock-trading
practices are being closely examined after a very suspect sale of
ImClone stock. Earnings for Martha Stewart Living Omnimedia plummeted
53 percent in the first quarter of 2002.

In Japan, Stewart still seems poised. "We hope to rebound with the
Japanese economy," she tells Kelts. Japanese media call her the
"charismatic housewife," and her launch in Japan has generally been
considered a success.

Stewart says she visits Japan twice a year; perhaps that number will
increase. By teaming up with Seiyu, she's indirectly connected
herself to the world's biggest company, Wal-Mart, which boasts a
mind-boggling $219 billion in revenues and has the right to buy up
two-thirds of Seiyu should it so choose. Can some of that Wal-Mart
success rub off on Martha in Japan? And will American retailers
really upset the status quo here? Not without resistance. "I don't
want to see Japanese manufacturers underselling their goods to adapt
to American discount ideals. That's bullshit," says Masahiro
Matsuoka, co-head of Japanese equity research at UBS Warburg. Check
out the retail battle from the frontline in our latest issue.

-- Bruce Rutledge


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** Bank Regulators Tell Mizuho to Get Its Act Together

Extract: The Financial Services Agency ordered Mizuho today
to improve its operations, Mizuho Holdings president Terunobu
Maeda told the press. The chiding was because of Mizuho's
disastrous launch in April, when technical glitches caused
millions of bank transactions to misfire. The bank has also
been criticized for being less than forthcoming with government
inspectors. That prompted the Bank of Japan to warn that it may
inspect the bank at any time. But, alas, shuffling of management
at the top has left the elite pretty much in tact, analysts say.
They are doubtful that Mizuho is really determined to improve.

Reuters wire, June 19

"Online Brokerages See Record Trading Volume in March" from May 2002

"Financial Authorities Pack a Punch" from December 2001 issue

"A New Sheriff's in Town" from December 2001 issue

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** S&P Upgrades JAS, Says ANA at Risk of Downgrade

Extract: Standard & Poor's announced today that it had raised its
rating on Japan Air System to single-B-plus-pi because of the likely
benefits JAS will see from its October 2002 merger with Japan
Airlines. The US-based ratings agency also kept its double-B
long-term rating on JAL, saying JAS' weak balance sheet won't hurt
Japan's No. 1 carrier too much.

S&P warned that All Nippon Airways, Japan's leading domestic airline,
may find its role threatened by the JAL-JAS merger. "Without a
drastic reorganization of its flight schedule and further
restructuring of unprofitable businesses, ANA's credit quality could
worsen," S&P said in a press release today. The ratings agency now
gives ANA a double-B-minus-pi rating.

S&P's corporate ratings in Japan

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** E*Trade Japan Punished for Questionable Orders

Extract: The Financial Services Agency suspended some operations of
E*Trade Japan this week because the online brokerage traded shares of
nickel processor Shimura Kako for a client while knowing the
transactions could be used to manipulate the market, news agencies
reported. The FSA said it would ban the company from offering stock
advisory services for five business days beginning on Monday June 24.

The Securities and Exchange Surveillance Commission said that E*Trade
accepted trading orders in January 2001 from business consultant
Yoshiteru Nishi, who was arrested this year for manipulating the
company's share price. His trades with E*Trade helped drive Shimura
Kako's stock price up to 719 yen from 546 yen over six trading days,
the SESC said.

E*Trade, one of Japan's biggest online brokerages in terms of volume,
is owned by E*Trade Group of the US and Softbank.


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Written by Bruce Rutledge (bruce@japaninc.com)

Edited by J@pan Inc staff (editors@japaninc.com)


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