For the record, this is the Bloomberg report on this subject. I believe that this information has been out for at least a week, and today's Bloomberg Report is kind of a wrap up:
Softbank Cancels Plan to Sell Shares in Units (Update3)
By Hiroshi Suzuki
Tokyo, Aug. 1 (Bloomberg) -- Softbank Corp., the fourth worst performer this year among Japan's 500 largest companies, canceled plans to sell shares in units involved in electronic commerce, publishing, online banking, insurance and software.
The decision, which the company said was aimed partly at keeping its tax bill low, comes after analysts questioned whether the plan would make Softbank a less attractive investment. Softbank did not disclose how much it had intended to raise.
The Tokyo-based company, whose shares have fallen 70 percent this year, has built itself into one of the world's biggest bankrollers of Internet ventures by betting on start-ups before they go public and then using its post-IPO proceeds to finance new investments. A slide in global Internet stocks this year threatens Softbank founder Masayoshi Son's strategy.
``Investors aren't likely to welcome the IPOs of Internet companies anymore,'' said Akira Ishihara, an analyst at Shinko Securities Co. ``The premium has disappeared.''
After surging more than 14-fold last year, Softbank has stumbled, making it the fourth worst performer on the Topix 500 index of the largest stocks on the Tokyo Stock Exchange. The Topix has declined 15 percent this year. Softbank rose 100 yen, or 1.1 percent, to 9,250 after earlier rising as much as 9.6 percent.
Doubts
Shares of Internet companies and those with Internet-related investments have suffered this year amid doubts they'll be able to become profitable. The Sankei-Bloomberg index of 30 Internet- related companies in Japan has fallen 69 percent since Jan. 1.
Softbank has not been immune. Morningstar Japan K.K., 49.8 percent owned by Softbank Finance Corp., has lost more than half its value since its June 23 debut on Nasdaq Japan. That's even after the affiliate of Chicago-based mutual fund rating firm Morningstar Inc. surged 21 percent on its first day of trading.
Softbank Finance Corp. is one of the five units in which Softbank had intended on selling shares. The other holding companies include Softbank Media and Marketing Corp., Softbank Broadmedia Corp., Softbank Networks Inc. and Softbank e-Commerce Corp.
The plan to list the units was originally announced in late May when Softbank released earnings for the year ended March 31. The decision to scrap the plan was made at a meeting of the Tokyo- based company's board of directors last night.
Softbank board members also decided to maintain full control of the companies in part to take advantage of preferential tax treatment, the company said in a press release.
Share Slump
Analysts said the decision to cancel the sales won't halt the decline in Softbank's shares, which before today's gains had lost 30 percent of their value in the last nine trading days.
``Softbank needs to change its business strategy,'' which has been aimed at seeking a larger market value for the Softbank group, said Kota Nakako, an analyst at UBS Warburg LLC. ``It has to create businesses which are able to generate cash flow.''
That's unlikely to happen. The company has effectively ended its participation in revenue-generating enterprises. The parent company said in May it will have zero revenue for next year with profit of 3 billion yen.
To offset the lack of revenue, Softbank has sold some of its holdings in companies such as Trend Micro Inc., an anti-virus software maker, and Pasona Softbank Inc., a staffing company.
Investors balked in March when Japanese newspapers said the Internet investor was considering a sale of as much as 300 billion yen in new shares to help fund its investments in fledgling Internet startups. The shares fell as much as 14 percent on March 24 when the story first appeared in the Nihon Keizai newspaper. The company later denied the reports.
Softbank's listed investments include U.S. Internet directory Yahoo! Inc. and its Japanese counterpart, Yahoo Japan Corp. |
