TOKYO -- A few weeks back, a senior official at downtrodden Japanese phone-seller-cum-Internet-incubator

Hikari Tsushin

complained about the media's bashing of his firm.

"It's been a long and torrid campaign against us," complained Masahide Saito, managing director of corporate strategy and investment. But he confidently predicted the barrage would come to an end when the company announced its half-year earnings, which were released on Monday.

Saito was right. Things sure do look like they're approaching an end -- just not the end Saito might have envisioned.

Hikari, once the poster company for Japan's burgeoning Internet revolution, said it expects an operating loss of 11.6 billion yen ($109.6 million) for the year ending Aug. 31. It will be the first loss in the company's 12-year history. The company's share price has collapsed 92.3% from its high of 230,000 yen in mid-February. The shares, which have traded only a few times in the last three weeks because of trading imbalances, are ask-only at 17,800 yen.

The debacle has left one of Japan's brightest Internet plays diminished. While the company is not traded as an American Depositary Receipt in the U.S., it has weighed on Japan funds, which are down 12.5% since the beginning of the year, according to fund tracker

Lipper Analytical Services


Funds such as


Warburg Pincus Advisor Japan Small Company, down 38% year to date, and the


Warburg Pincus Advisor Japan Growth fund, down 33.3%, had large holdings in Hikari as of the end of February, according to fund tracker



Company President Yasumitsu Shigeta, who was profiled on

April 13, has promised to slash sales targets and halve the number of his phone shops. He apologized for causing investors so much trouble, and suggested that Hikari Tsushin be reorganized as a holding company. He also said he would come up with more restructuring plans by August -- longer than some investors can wait.

"By August!? You would think Hikari had something else cooking when shares have nose-dived by more than 90%," since their highs in mid-February, said a fund manager at a foreign investment trust, who declined to be named. "They have a lot to learn about investor relations." The fund manager declined to disclose whether he is selling his remaining stake in Hikari Tsushin, which is about 6% of his portfolio.

A series of investment-relations bungles have cost Hikari dearly. In mid-March, just as the shares started to stumble, Shigeta assured investors that business plans and profits were cruising along just fine. Two weeks later, the firm said it would have a half-year loss of 13 billion yen. On Monday, Hikari disclosed that it had paid back loans totaling 48.5 billion yen to three banks ahead of schedule to prove it had an ample cash flow. The firm, however, also said the loan repayment was possible only after a private firm -- which Shigeta owns a stake in -- extended Hikari a 25 billion yen loan.

It's little surprise that investors can't concentrate on some of Hikari's good points. It still signs up about 35% of Japan's new mobile-phone subscribers and the firm also runs

, the country's largest content provider of Internet sites for mobile phones. Traders now expect bargain hunters to step in if the shares slide to about 10,000 yen.

"The firm had been running on tiptoes for years and now it's tripped," said a general manager at a Japanese securities firm, who asked that neither he nor his company be named. "Investors who bought shares on astronomically high expectations for the company are partly to be blamed for Hikari's downfall as well."

Hikari Tsushin, which means "ray of light communication" in English, had better come up with a more concrete restructuring plan, a new business model and, perhaps, even a new president pretty soon. Investors have already shown that they're ready to savage the company with lightning speed.