July 14, 1998
Softbank Targets Internet Brokerage
by:Julio Gomez
I am writing this article from a beach in Nantucket -- my yearly pilgrimage to tan myself brown as a raisin. Here is a story I think you will appreciate.
I get a lot of phone calls. Few of which, though, are as interesting and foretelling as the one I got last week from Mr. Masayoshi Son, the CEO of Softbank. Calling from his car phone in Japan, Mr. Son wanted to know the precise differences between the Scorecard's top rated brokers: DLJdirect and E*TRADE.
We discussed the industry at length. Soon after the call, Mr. Son acted by quickly purchasing $400 million of E*TRADE (EGRP). He got a 27.2% ownership steal at an undervalued $25.56 per share.
The Bottom Line: Here's what's driving Softbank:
* The Japanese "Big Bang." The deregulation of Japanese financial markets has created a considerable opportunity for a strong online player to emerge. E*TRADE already had plans to open up in Japan, Softbank's investment will greatly accelerate things.
* E*TRADE is undervalued. E*TRADE was a bargain at $25.56, especially in light of the bloated valuations of other e-commerce providers, such as Amazon (AMZN). Many of these companies have significantly less potential than E*TRADE, one of the stronger Internet brokers.
* Softbank continues to shift its focus away from the slowing PC revolution. Softbank, always attune to emerging trends, made the astute decision to invest early in e-commerce and Internet navigation. It continued its run of smart investments by choosing to invest in another key infrastructure industry: Internet brokerage.
Here is a message to all potential investors in Internet brokerage firms: You ain't seen nothing yet! |
