Softbank Corp.'s long-term
debt rating is under review for possible upgrade by Moody's
Investors Service, the U.S. ratings agency said, citing the
Japanese Internet investment company's recent moves to shed its
non-Internet businesses.
Moody's said it is considering raising Softbank's ''B1''
long-term rating, which is four notches below junk status. It
took a positive view of Softbank's decision earlier this month to
sell its 80 percent stake in U.S. memory-chip-module maker
Kingston Technologies and take steps to reduce its 69 percent
interest in U.S. computer magazine publisher Ziff-Davis Inc.
''The actions, combined, will result in significant
enhancements of (Softbank's) cash position over the short-term,''
Moody's said.
Softbank, which posted a group pretax loss of 15 billion yen
on sales of 528 billion yen in the year ended in March, had at
that time total liabilities of around 605 billion yen resulting
in part from its debt-financed acquisitions of Kingston and Ziff-
Davis earlier this decade. Both subsidiaries have become a drain
on group earnings in recent years, while Softbank has run up
unrealized gains of $14 billion on a series of successful bets on
Internet ventures including Yahoo! Inc.
Softbank announced June 15 it will sell Kingston back to its
two founders for $450 million as part of a strategy to ''limit
its majority position in companies that do not operate totally on
the Internet.'' It initially agreed to pay about $1.4 billion yen
for the stake in September 1996, and had the purchase price
reduced by about $333 million in October 1997 to reflect
deteriorating conditions in the global memory market.
The company also gave approval to Ziff-Davis, the publisher
of PC Week magazine and owner of the Comdex computer trade show,
to sell some or all of its businesses.
''Softbank's intention to focus heavily on Internet-related
business activities carries fantastic growth potential, as well
as significant downside risks,'' Moody's said.
Founded in 1981 as a software distributor, Softbank is a
major investor in many of the most-visited on-line businesses,
and analysts say its portfolio represents between 3 percent and 8
percent of the total market capitalization of listed Internet
companies.
Its stock today rose 100 yen to 31,300. Moody's announced
the review after the market closed.
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