Japan's Top Online Service Becomes a Fujitsu Subsidiary
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Japan's largest Internet service and proprietary online content provider, NIFTY-Serve, will become a wholly owned subsidiary of Fujitsu Ltd. beginning in April.
Nissho Iwai Corp., one of Japan's leading general trading companies, has announced that on March 31 it will sell its entire 50 percent stake in NIFTY Corp., operator of NIFTY-Serve, to information technology giant Fujitsu for 26 billion yen (US$220 million).
NIFTY Corp. was formed in 1986 (originally as N.I.F. Corp.) as a 50:50 joint venture between Nissho Iwai and Fujitsu. The company began marketing CompuServe access from Japan in March 1987, and launched its NIFTY-Serve services the following month.
NIFTY-Serve signed up 500,000 subscribers in its first six years of operation. It grew quickly from 1993, reaching 1 million subscribers in April 1995 and 2 million in September 1996.
Nissho Iwai's decision to pull out of NIFTY Corp. is part of a restructuring drive aimed at reducing group assets by 1.6 trillion yen (US$13.6 billion).
The group suffered an extraordinary loss in FY 1998 of 160 billion yen (US$1.4 billion) on liquidation of a financial services unit.
Even with the 25.5 billion yen (US$216 million) profit from the sale of its 10,000 NIFTY Corp. shares, as well income from the sale of its Osaka head office and other properties, the troubled trading giant will post an unconsolidated net loss of 44.5 billion yen (US$377 million) for FY 1998.
Nissho Iwai clearly was eager to sell its NIFTY Corp. shares before the end of the current fiscal year, and Fujitsu was not the only prospective buyer. The Japanese-language Mainichi Shimbun reported last week that Nissho Iwai was negotiating with NTT DoCoMo, which is interested in obtaining a stake in a major Internet service provider as a means of diversifying its services.
For Fujitsu, the acquisition represents a major opportunity to expand its network business and create greater synergy between NIFTY-Serve and its InfoWeb Internet access service.
"InfoWeb targets mainly corporate users," said a Fujitsu spokesman, "while NIFTY-Serve's strength is its large pool of individual users. So the two complement each other. By taking advantage of the strong points of each service, we hope to strengthen our overall network services business."
To strengthen its content operations, Fujitsu is also expected to build up the relationship between its NIFTY-Serve and its G-Search database business affiliate.
NIFTY-Serve generated 43.1 billion yen (US$365 million) in sales in fiscal year 1997 (through March 31, 1998). Revenues for FY 1998 are projected to be about the same or slightly higher.
Earlier plans had called for NIFTY Corp. to go public by 2001, with Nissho Iwai selling its shares on the open market. Fujitsu intended to acquire just enough shares to make it the majority shareholder.
With the purchase of a 100 percent interest, however, its seems unlikely that Fujitsu will proceed with the planned over-the-counter listing of NIFTY Corp.