Zeev:
Read another denial (from Softbank) and in-between the lines
(Softbank prices are at the lowest level now):
Japan's Softbank chief dismisses business worries
Copyright c 1997 Nando.net
Copyright c 1997 Reuters
TOKYO (October 24, 1997 09:28 a.m. EDT nando.net) - The founder of information group Softbank Corp, one of the
most aggressive companies in Japan, said on Friday defended his management and said that his firm's financial base is solid.
"Looking at recent media reports over our management, there are many comments expressing doubts over our business, but if
you take an objective view point, our management is not as bad as they say," billionaire Masayoshi Son told reporters.
"The business base of Softbank as a whole is sound, so there is no need to panic," Son added.
Softbank has become one of the most closely watched companies in Japan, due to its fast expansion. Aside from its core
computer software business, it is a partner with Rupert Murdoch in a Japanese satellite television service and is a major
provider on the Internet. It has also been an aggressive buyer of companies abroad, especially in the United States.
The company announced that its parent-only current profit grew 39 percent to 11.7 billion yen ($96.6 million) in the six months
to September. Current profit is pretax and includes gains or losses on non-operating activities, such as investments in stocks.
But at an operating level, a better reflection of its actual business, Softbank's half-year profit slid 18 percent to two billion yen
($16.5 million).
Son said sales for the full year would be 220 billion yen ($1.81 billion), about 20 billion yen ($165 million) smaller than its
initial estimate, due to a slump in personal computer sales in Japan.
Sales faltered in the April-June quarter of 1997 after doubling annually for years. Sales of desktop PCs sagged 11 percent to
one million units, recording the first year-on-year decline in five years.
But Son said that an increase in the software networking business may keep its parent current profit at 25 billion yen ($206
million), the same level it had predicted earlier. It posted a profit of 23.41 billion yen ($193 million) in 1996/97.
"While most of computer related companies are seeing falling profits, we will likely enjoy year-on-year growth with both
sales and profits at record levels," Son said.
Son said operating profits for the full year will rise 3.6 percent to 7.2 billion yen ($59.5 million), adding that the company had
sufficient cash flow so that there is "absolutely no problem" concerning the company's business.
But industry analysts say they are still concerned about a lack of information about Softbank's aggressive expansion overseas.
A lack of information about Softbank's overseas operations, which account for three-quarters of its total operating profit, has
frustrated analysts.
Softbank does not provide separate earnings results for its U.S.-based businesses, although it has spent more than $4.5 billion
in the past two years investing in more than 30 computer companies, mostly in the United States.
On Friday, prior to the earnings announcement, Softbank shares rose 100 yen to 4,000 yen on the over-the-counter market on
news that its purchase price for U.S. memory board maker Kingston Technology had been cut to 129.4 billion yen ($1.06
billion) from 169.4 billion yen ($1.40 billion).
Softbank said the price cut would increase its annual group profit by 3.1 billion yen ($25.6 million) this business year and by
1.7 billion yen ($14.0 million) in and after 1998/99.
Some of The Inside Report's toughest accusations
center on MAC, a private company wholly owned
by Son that holds 43% of Softbank and other assets.
Skeptics have long suspected Son of hiding Softbank
debt and money-losing enterprises in MAC. The
book makes those claims specific, alleging that
MAC has a dangerous load of $820 million in bank
debt and a negative cash flow of $35 million a year.
It even speculates that a collapse of MAC is
possible and would bring down Softbank.
The claims provoked Son to hold a press conference
in Tokyo, where, to some extent, the skeptics proved
right. For the first time, he disclosed that MAC has
bank debts totaling $610 million. He noted that
MAC had acquired some of Ziff-Davis's
loss-making operations, like Internet start-up ZDNet,
in order to let the struggling businesses incubate
without dragging down Softbank's financial results.
He denied, however, that MAC suffered cash losses
as high as $35 million a year. |
