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Internet Initiative Japan Takes Wild Ride

Updated from 7:07 a.m. EDT

Speculative trading may afflict all stock markets, but credit Japan's momentum traders with bringing a certain panache to the party.

When U.S. stocks run amok, they tend to be driven by some vague marketing lingo about revolutionizing the world through turn-key solutions, or search-enabled advertising or 24/7 e-commerce platforms.

But during the great Japanese stock bubble, stocks soared on colorful rumors of cures for AIDS or environmental breakthroughs that would end the scourge of pollution. On the Tokyo Stock Exchange, you could dream big dreams and -- if you sold at just the right time -- make an even bigger profit.

That spirit of capitalistic idealism is in play behind Internet Initiative Japan (IIJI), a Tokyo-based company that listed its ADRs on the Nasdaq in 1999, when the Japanese stock market was hostile to IPOs but its American counterpart was taking nearly all comers. IIJ surged as high as $13.90 this week from $2 in early May, with much of the gains coming on little more than an announcement that the company would help Toshiba battle another global scourge: spam.

Never mind that IIJ's announcement said that "Toshiba maintains tens of thousands of mail accounts" -- compared with the tens of millions managed by Microsoft's (MSFT) Hotmail or Yahoo! (YHOO). Since the June 7 announcement, IIJ's stock went from $9 to just shy of $14 on Monday.

Thin gruel for such a rally, so could there be something else pushing the stock higher? Well, there is an alternative explanation, albeit a less idealistic and possibly more cynical one.

On May 27, IIJ announced it would do what it hoped to do six long years ago: List its shares on the Tokyo Stock Exchange's Mothers Market for small-cap stocks. "The offer price for the public offering in Japan will be based on the closing price of IIJ's American Depositary Receipts on the Nasdaq National market on the date prior to the pricing date," IIJ said in a release.

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