BubbleOctober 2014

London1987

After Black Monday

First day in the market

Eric

“Buy or a Sell?”

Undervalued = Buy

Financial Analyst

Fundamental

Analysis

PE, Dividend, Payout

Ratio,

Cash flow, ROE…

Explanation

Analysis

Crossholding,

Triple Merits,

Accounting difference,

theme driven

✗ ✓

Financial Freshman

My First Bubble!

Tokyo Real Estate Bubble1987-1990

Q not Yield

Total Market Value

Asset Replacement Value

Q ratio

Below 1 undervalued BUY

Over 1 overvalued SELL

Q =

Tokyo Bay Bubble

Real Estate Theme

Construction

Construction Materials

Construction Machines

Banks, Financials, Warrants

Railways, Warehouse

Companies with Tokyo headquarters

Tokyo Gas…..

How Bubble Spread

Nikkei Peak 38,957.44

Dec 29, 1989

Bust!

Jan 1990

Came To Japan1990

Financial Analyst

Basic Materials

Component

Utility

The most “exciting” sector

NTT

KDDI

Telecom Deregulation1994

DDI, Japan Telecom,Teleway

Tuka, Digital Tuka, Digital Phone,

DDI Pocket, NTT Personal, Astel

NTT Breakup (NTT EW, Com, Data)

Telecom construction

Component, handsets

Docomo

More companies to cover…

Mobile Boom

“Mobile phone will not penetrate in Japan” (Comment from top sell side telecom star analyst)

1994

Valuation

Pop, DCF, EBITDA, PE, Dividend

Subscribers/Revenue

Penetration Cycle

Cash flow (Shareholders return)

(M&A)

Maximum accumulated loss

(optimal capital structure)

Capex/Marketing

Pop value

(Spectrum)

DCF

(WACC)

EBITDA

PE

Free Cash flow

ROE Dividend

Docomo IPO1998

com Bubble

1999

Telecom, CLECs

Internet, ISP, AOL

IT, Devices, Chipsets

Cyber, Information Superhighway

eFlower, eToy, e…..

eVerything is a Buy!

How Bubble Spread

“Eric…you are out of fashion!”(comment from a Buy Side analyst)

1999

Dollar per eyeball

Buy or a Sell?

everything is overvalued

even eric is overvalued = Sell

Time to Leave Nov 1999

NASDAQ Peak 5408.60

March 2000

eAccessNov 1999

Venture Started with Aluminium Door & two tables

ADSL = ADS Hell

YBB! + 9112001

Buy or a Sell?

eTremely Undervalued = Buy

Turn profits & IPO2003

EMOBILE2005

Raised $4.0 billion(Debt + Private Equity)

Capex Opex Sales Marketing

US Sub Prime Bubble2005

Credit Market Products

MBS, CDO, ABS, CMBS

Bust - Lehman Shock2008

TsunamiMar 11, 2011

eAccess Refinancing (High Yield)

5X Oversubscribed

Mar 2011

LTE

iPhone 5Sept 2012

I got a call!

VC, Private Equity,

Project Finance (JDSL)

IPO, CB, SB,

Senior Debt Financing

M&A (ACCA, AOL Japan),

High Yield, Swap

Stock Exchange Merger

Delisted Dec 2012

eAccess Story – Incredible experience

(1999 to 2014)

Start-up, business plan

HR, Network, Technology

Accounting, Reporting

Regulator, License

Product, Pricing

Marketing, Channels

Churn, Customer Support

Operational synergy

FinancialOperational

Private & Quiet

2014

New Challenge Just Begins

Final Takeaway

To become TRUE EntrepreneurBusiness Focus First

Valuation?

InterestConsumersRevenueEBITDAEBIT

Net profitsCash flowDividend

Greed

Fear

New Bubbles?