A change of president after insolvency, and the unwinding of every post-IPO subsidiary (2007)

A rebuilding plan with nothing to add

What was settled in November 2007 was not who would run the company but what it would stop owning from the following year. The list Tanaka Kunihiro set out in his inaugural message was: a return to the data-center business, a review of unprofitable businesses and subsidiaries, the sale of part of the business, and a strengthening of capital. Not one item proposed adding anything. A company that in two years since listing had piled up acquisitions, new subsidiaries and an online-game venture would spend the next two doing only two things — pushing assets out and filling holes. That the man folding it up was the man who had spread it out, and that his message opened with an apology, is what gives this handover its character.

Narrowing to the core, though, reduced the number of ways to earn to one — and the number of choices to one as well. Net profit returned to $4M (¥374m) in the year to March 2009 because only the monthly-billed rental servers and data centers were kept and the cash-draining ventures were pushed outside. The four companies acquired or founded after the listing disappeared in sequence between July 2007 and March 2008; by the same stroke, every means of generating cash other than housing and running servers disappeared with them. A rebuild that folds a company back onto a single line holds only for as long as that line is growing. That the operating cash flow restored to $22.8M (¥2bn) in the year to March 2010 went into land and buildings in Ishikari was, in all likelihood, because there was nothing else left to feed.