Sony would be in deep trouble unless IBM bought stock. They had to weather this crisis somehow. In fact, Sony's crisis had very personal implications for Yoshii as well.
Yoshii had joined Sony in 1961, just before Sony issued its first ADR stock. At this time, Yoshii had bought 20,000 shares of Sony stock. With the six million yen he had received in retirement pay after 30 years at Mitsui Bank, he had bought 10,000 shares and then used the stock as collateral to buy another 10,000. At 590 yen per share, the 20,000 shares were valued at close to 12 million yen. Morita wondered if Yoshii could handle an investment of such proportions.
When Yoshii had bought them, Sony was on an upward trend, and he was not worried. With the equalization tax, though, the stock he had bought at 590 yen dropped to 250 yen. Yoshii, who had invested his entire retirement capital and even gone into debt, was in trouble.
Luckily he had bought the first 10,000 shares for cash. The problem was the loan for the remaining 10,000 shares. He was mocked because even four years after joining Sony, he had to use nearly his entire paycheck to repay what should have been a wise investment. His colleagues from the bank also mocked him for losing half of his investment, which represented a large portion of his life savings. Still, as the owner of 20,000 shares, Yoshii's predicament did not begin to compare with the magnitude of Sony's plight.
Just before Yoshii was about to go to the U.S. to visit IBM, he received a call from the bank. "Your collateral is no longer sufficient to cover your loan, so we'll have to sell the stock when it reaches 300 yen a share." The disheartened and resigned Yoshii headed for IBM headquarters.
IBM's size far exceeded Yoshii's expectations. He was particularly astonished to find that IBM had executive cafeterias for each level of the managerial ranks. While waiting at one of these cafeterias for the chairman of IBM, Yoshii became skeptical. Would IBM consider Sony's request? Things being as they were, however, he had no choice but to give this sales pitch his all.
I'm asking you to invest in Sony stock. The reasons why you should buy into Sony are..." Yoshii explained the situation intently. The financial coordinator of the international section was called and everything was finalized on the spot. IBM bought 500,000 shares at 633 yen each for a total of 300 million yen.
Sony was saved. Thanks to this purchase, Sony's stock rebounded and triggered a foreign investment boom in Japan. Sony stock jumped to over 1,000 yen per share. Some worried that the leap in price would lead to a takeover by foreign capital.
But Sony spokespeople responded by stating,"Stock prices should be a reflection of the corporate condition. Foreign investors have simply pointed out that Sony's stock was undervalued. Everyone is making an issue of foreign capital, but as long as business continues in an upward trend, all worries about foreign takeovers are groundless. Besides, Japan benefits from the inflow of foreign capital. In a capitalistic economy, it is not only xenophobic but meaningless to take issue with whether investment capital comes from home or abroad." This stand put all doubts to rest.
In this way, Sonys efforts in both securing foreign investment and issuing ADR stock represented the history of capital procurement for all Japan.