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Japan strikes back

I would like to start my analyzes from financial statement of NTT. It is the most interesting company in the sector of telecommunication because of really specific strategy and really high growth opportunity.

The NTT’s stock price has increasing during last year, from 26$ in November 2014 to current costs of 38$. NTT has a really high market capitalization of 80.5 billion (comparing with other companies in this market it is one of the most powerful telecommunication company). Investing in NTT is low risky (Beta = 0.07, and quite small ROE 3.9%). EPS equal to 42.97, so it is a really good company for investing according to financial statistics.

Strategies of NTT…

NTT chooses the way of globalization, it is becoming one of the most powerful telecommunication company. Now let look at the main trends and opportunity of growth. Nowadays, NTT is growing really fast (comparing with other companies in this market). It increases market power, increases employees and open new branches around the world.

According to this map, NTT has really huge ambitions to become widespread. The amount of technology which they are providing higher than services, intuitively it means that the cost of employees will cover by revenue generates by technology, and it is really true. The quality of NTT services is really high; NTT is implementing a pile of new technologies which are becoming very useful around the world.

Let's look at the segments which are providing by NTT.

The most powerful segment of NTT is “mobile communications” (by NTT Docomo – one of the group company of NNT), according to the record 31th of March; NTT operating revenue in this segment about 4,383.4 billion yen with operating income about 640 billion yen. In fact, “long distance and international communications” segment brought operating income, which is six times lower than “mobile communications”. Furthermore, according to it, in “mobile communications”, number of employees- two times less, so the costs of the wages in this segment also lower. As can be seen from the bar chart, “mobile communications” sector generates the highest revenue around all of other firms.

Furthermore, if we looked at the bar chart connecting with operating income, we can easily see that the income of “mobile communication” one and a half time higher than all of other segments together. The reason is that the costs on this segment is really small (the number of employees is two times lower than in “long distance and international” segment, also the expense on R&D is really small, because there are scarcity of innovation connecting with these sectors). It is really silly to say that NTT should precisely choose “mobile communication” segment, only because it generates high income, because high income is not enough. NTT became the leader on the market of telecommunication, because their high expenditure on R&D. If we look at the history of NTT we can find that NTT collaborate with many huge companies and not only in telecommunication sector. For example the recent invention – Interactive Visual Technology for Spherical Games jointly with DWANGO (the main idea of it is providing an interactive view in any direction through a head-mounted display (HMD) that receives images from a 360-degree spherical camera placed in a live house). Or In cooperation with Toray -they have developed and commercialized hitoe, a functional material that can measure biometric information, such as heart rate and electrocardiogram waveform). According to all of this information the main idea of NTT is improving not only telecommunication technology, but also a lot of different stuff in the total market of technology.NTT absorbs not only telecommunication market, but also the market of R&D in technology. There is the current trend, and this trend will be continuing in nearest future (because this strategy works in the real market, and it always generates a positive income).

In conclusion, I am strongly recommending to BUY NTT stocks. It has a very strong financial figures and has a very interesting and unique strategy NTT. Also, despite the fact that NTT has a lot of expenditures on R&D, it generates the positive income (It means that it has a high opportunity for future growth). Moreover, the revenue is currently growing together with expenditures (R&D, wages, branches), but NTT’s income growth, which means that NTT generate much more revenue than costs, which shows a high profitability.

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