Kim Sang-hun NHN CEO

By Cho Mu-hyun

NHN, the operator of the nation’s top Internet portal Naver, is desperate to revive its stalling business momentum. But this time, it is betting on its overseas ventures, particularly in Japan.

NHN, grappling with mountainous criticism from investors over its sluggish key businesses and one of its employees’ alleged embezzlement of millions of dollars, plans to use its Japanese interests for a big breakthrough.

However, investors remain skeptical about NHN’s recent capital increase in Japan and they doubt the feasibility of the plan. NHN purchased 87,369 new shares worth 213.78 billion won issued by affiliate NHN Japan.

“The purchase of the stock is to secure funds for strategic investment and marketing to be used to repay the debts of Naver Japan and strengthen its service competitiveness,” said NHN CEO Kim Sang-hun, Thursday.

“NHN Japan’s search, online and smartphone games services are all showing signs of picking up. The funds will be the basis for our overseas ventures.”

NHN recorded sales of 567.7 billion won and a net profit of 135.9 billion for the first quarter, up 14.2 percent and 10.3 percent respectively from a year ago.

But its operating profit fell by 3 percent to 161.7 billion won between January and March from a year earlier. The operating profit squeeze led to a plunge in stock prices.

NHN told analysts during the conference call on its first quarter results that “there are no reasons for stock prices to plunge.”

“Our Line and other mobile services are getting good feedback and our online advertising is also steadily rising,” said the NHN CEO.

“We will continue to carry this momentum to provide users with excellent wired and wireless services and diversify our game line-up.”

The corporation’s earnings from abroad rose 20.3 percent to 8.89 billion won, the only undisputable good news amid lackluster performances. Kim’s comments reflect the stagnating profits among NHN’s businesses at 161.4 billion won, a reduction of 1.1 percent.

The Korean firm merged Naver Japan and Livedoor’s blog service (which NHN purchased from the Japanese company last April) in January into one corporation under NHN Japan, as a step to further push its content in the neighboring country.

During the conference call, Kim revealed that the firm is betting on revenue from its Sticker Shop service (part of its Line messenger product) for additional earnings in Japan, and is planning to expand tests for the profit model in Japan.

The increase in paid-in-capital is speculated to be in preparation for the tests and to push the added content to Line. Line currently has 34 million subscribers worldwide with 12 million in Japan.

NHN is also planning to push its games, which is providing a steady income in Japan. The company offers 165 games there and plans to add 40 more by the end of this year, compared with 20 offered to Koreans.