I think that long term observers of Softbank have noticed that Softbank does not track the other internet stocks or even their own holdings, like Yahoo. I think that it is because we can see that Softbank is really not dependent upon any narrow aspect of the internet such as B2C type companies. The reach into financial investments and B2B type enterprises and who knows what other areas round out a comprehensive business model. When you buy into Softbank you are truly buying in to the entire internet like you might with a well run internet mutual fund. The important difference is that Softbank can encourage cooperation between the various members of the Softbank "family" that is not possible for a mutual fund.
Anyway, Softbank is only up 1000 yen to 134,000 yen in Tokyo. That is equivalent to $1241 and is well below the last close in the US of $1330. We have been living with these price discrepancies between Japan, Europe, and the US and it seems to be more than just changes with respect to time differences. Hopefully we will eventually be able to understand why such large differences exist.
Friday, February 4, 2000
Softbank, Konami Lead High Growth Stocks
TOKYO (Nikkei)--The Nikkei Stock Average Friday briefly topped 20,000, before ending the day at 19,763.13, down 23.29 points from Thursday's finish.
This marked a 53% rise from its post-bubble low of 12,879 on Oct. 9, 1998 through Friday's close. Trading value on the first section of the Tokyo Stock Exchange stood at a high 1.4 trillion yen.
High-tech stocks such as Softbank Corp. (9984) and Konami Co. (9766) ranked high in the growth rate of share prices over the same period among Nikkei 500 stocks. This reflected market expectations that Japan will push for economic structural reforms with an emphasis on these sectors.
Top 30 High-Growth Nikkei 500 Stocks
(percentage changes from lows posted after Oct. 9, 1998)
1. Softbank 2,581.4
2. Konami 754.4
3. CSK 562.8
4. Tokyo Electron 522.1
5. Daiwa Securities Group 467.1
6. Japan Telecom 459.2
7. Hitachi Software Engineering 432.1
8. Nikko Securities 409.6
9. Matsushita Communication Industrial 405.7
10.Taiyo Yuden 398.6
11.Advantest 393.9
12.Tokyo Seimitsu 382.9
13.Yaskawa Electric 365.7
14.Nikon 355.0
15.Furukawa Electric 342.6
16.NTT Data 334.4
17.Nippon Sheet Glass 322.4
18.DDI 305.8
19.Tokyo Broadcasting System 301.2
20.Mitsubishi Electric 299.0
21.Takara Shuzo 285.7
22.Kyocera 284.6
23.Sony 275.5
24.Seven-Eleven Japan 275.1
25.Keyence 266.0
26.Nippon Television Network 251.9
27.New Japan Securities 251.4
28.Dainippon Screen Mfg. 246.1
29.Fujitsu 237.2
30.Nomura Securities 233.1
(The Nihon Keizai Shimbun Saturday morning edition)
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This story is not really about Softbank except that it discusses some aspects of the philosophy behind venture capital investing in Japan by yet another competitor to Softbank:
Monday, February 7, 2000
INTERVIEW: Goldman Sachs Promotes Japanese Start-Ups
TOKYO (Nikkei)--Kyocera Corp. (6971) and U.S. investment bank Goldman Sachs & Co. (GS) set up a joint venture in Tokyo in January to run a 30 billion yen fund for investment in start-up businesses, with GS contributing 20 billion yen and Kyocera 10 billion yen.
The Nihon Keizai Shimbun recently interviewed GS's Managing Director Michiya Nagai who heads the joint company. The following are excerpts:
Q: Why Japan, and why now?
A: We had been unable to move into the Japanese market for venture business investment because of unfavorable conditions such as the stagnant over-the-counter stock market and the difficulties associated with mergers and acquisitions.
But when Honorary Kyocera Chairman Kazuo Inamori and GS Chairman Henry Paulson, Jr. met last summer, they agreed to promote investment in new Japanese firms.
Q: Why have venture funds grown vastly in number in Japan over the past year?
A: There's already an excess of risk money. To find promising targets and earn reasonable returns, you must offer more than just money. Venture firms look for new shareholders based on this.
Q: For example?
A: Well, these include connections with the top management of high-tech companies worldwide, the availability of engineers and managers, and the ability to offer management advice.
Q: Is there a shortage of attractive investment opportunities?
A: We probably need four to five years to invest our fund in full. But information from reliable sources is the most important thing in finding suitable targets. Random cold calls won't go a long way. We have teamed up with Kyocera because of its ties with many promising venture firms in Japan.
Q: Why are unlisted stock prices soaring?
A: More investors are buying shares without paying due regard to their cost. But such an approach won't last long. As several years have passed since soaring Internet-related stocks began to lead the U.S. stock market, prices are starting to reflect actual earnings even among Internet-related firms.
As a result, participants in the U.S. market have learned lessons about relations between sales and the absolute value of customer numbers, growth rates and stock prices, and so forth with regard to various business models.
Q: Do you plan to invest primarily in information-processing concerns?
A: While we will invest in high-tech ventures, we aren't targeting any specific sector. But a large portion of our fund will go to information-processing and Internet-related firms since they offer relatively quick returns.
(The Nihon Keizai Shimbun Monday Morning edition)
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Corporate Profiles:
KYOCERA(6971)
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