Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness

By Martin Fransman | Go to book overview

APPENDIX 5 The Performances of NTT, AT&T, and BT Compared

How does the profitability of these three companies compare? In Table A5.1 the data provided show that NTT is by far the largest company measured by market valuation. Indeed, NTT is the largest company in the world in terms of market valuation. However, the picture is very different in terms of sales, with AT&T slightly larger than NTT and both these companies about three times as large as BT. In terms of profitability measured by the profits-sales ratio, BT comes out on top, and its P/E ratio is more than three times that of NTT. In terms of return on equity it is AT&T that does best, with both AT&T and BT performing significantly better than NTT.


Table A5.1 Profitability of BT, AT&T, and NTT, 1993
BT AT&T NTT
Market value (US$m) 40,701 82,400 140,521
Sales (US$m) 20,674 64,900 59,741
Profits (US$m) 1,952 3,850 1,783
Profits/sales ratio 0.0944 0.0593 0.0299
Return on equity 10.4 21.0 4.5

Further data on financial performance, this time for 1994, are given in Table A5.2. Most importantly, this table shows the huge price-earnings ratio of NTT compared with the two other companies. As shown in Appendix 4, this P/E ratio differential is typical of Japanese and Western companies generally.


Table A5.2 Financial Performance of Selected Telecommunications Carriers. 1994a
NTT AT&T BT
Net sales ($m) 63,542 67,200 20,657
Market value ($m) 128,938 73,875 33,893
Yield (%) 0.6 2.4 5.8
Return on equity (%) 3.5b 31.8 14.4
Price/book value ratio 3.2 5.3 1.8
Price/earnings ratio 270 17 13
Net sales/market value 0.49 0.91 0.61
aDefinitions: see Table A4.4.
b NTT Annual Report, 1993, p. 25.
Source: calculated from Business Week.

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