Wow, you are selling Sony and Microsoft? You appear to be showing a slight negative attitude towards the market<G>. Here is the explanation for the softness (is that an understatement, or what?) in Softbank's price. (Just kidding.):
Thursday, January 6, 2000
Softbank's Latent Profit On Stockholdings Grows With Net
TOKYO (Nikkei)-Softbank Corp. (9984) saw its unrealized profits on publicly traded stockholdings top 4.8 trillion yen at the end of 1999. The company appears to have surpassed Berkshire Hathaway Inc., whose unrealized profit on stockholdings, including Coca-Cola Co. shares, totaled 2.5 trillion yen at the end of September.
Softbank has transformed itself in the past year. In October, it became a pure holding company with four employees and no sales. Stock markets began to recognize the company's focus on investment in June, when its market value exceeded the market value of its stockholdings for the first time and led to a surge in its stock price.
The company swiftly focused investment on Internet-related shares, a move appreciated by the market. It sold U.S. memory maker Kingston Technology Co. and the publishing division of Ziff-Davis Inc. of the U.S.
The company's unrealized profits on stockholdings totaled 167 billion yen at the end of March 1998, less than its outstanding corporate bonds worth 200 billion yen, but now exceed by 20 times its outstanding bonds.
Softbank's market value topped 10 trillion yen at the end of last year, exceeding the total market value of its stockholdings by about 5 trillion yen. Although the firm's stock price plunged on Jan. 5, its market value still stood at 9.5 trillion yen.
Traders anticipate the market value of Softbank's stockholdings will grow by an additional 5 trillion yen. The company is now attracting risk money from firms and investors interested in Internet business, selecting Net companies in lieu of institutional investors.
If the company is to meet market expectations, Net-related stock prices need to stabilize at high levels and companies in which Softbank has invested will have to grow and go public in a smooth fashion.
On Dec. 28, Internet Research Institute Inc. (4741) got the first quotation of its stock on the Mothers market of the Tokyo Stock Exchange, and Softbank, with a 6.25% stake in the firm, got a latent profit of 43.4 billion yen against investment of 125 million yen. The company plans to have a number of group firms go public this year.
At present, Yahoo! Inc. accounts for half of Softbank's unrealized profits on stockholdings and Yahoo! Japan accounts for a quarter of them. Many analysts say Softbank needs to find a similar firm that brings large latent profits.
(The Nihon Keizai Shimbun Thursday morning edition)
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Corporate Profiles:
SOFTBANK(9984)
INTERNET RESEARCH INSTITUTE(4741)
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