Has the Japanese economy really recovered after the dot.com bubble burst? Did it really shake off the deflation of the 1990s?
Emphatically yes! The pent-up demand from the 1990’s for IT infrastructure has fueled a sustained spending boom. By the third year of the recovery in 2006, over 40 companies reported profits in excess of $855M (Y100B), lead by Toyota which had a 17% profit increase to $12B on sales of $171B. The Ministry of Finance reported that business spending was up 12% and pretax profits up 16%. The government announced an eight-year low in unemployment and 2.1% annual growth marking the end of deflation. Softbank bought Vodafone Japan for $15B, kicking off a string of mega-mergers such as Toshiba-Westinghouse nuclear, Daikin-Oyl, etc. Recof Corporation reported 1,409 M&A deals in 2006, with five of the top ten transactions involving an overseas business. Mixi, a Social Networking Service (SNS), staged an IPO and rose to a market cap of $1.9B just four days later with only $16.5M of revenues.
