Softbank Sells 3 Million Shares of YHOO
Softbank Reduces Stake in Yahoo, Sees Profit Tripling (Update2)
Bloomberg News February 16, 1999, 11:05 p.m. PT
Softbank Reduces Stake in Yahoo, Sees Profit Tripling (Update2)
(Adding in 1st paragraph that Softbank expects a pretax loss, adds new material including investor comment beginning in 4th paragraph,
closes share price.)
Tokyo, Feb. 17 (Bloomberg) -- Softbank Corp., Japan's top software distributor and a major shareholder in dozens of Internet ventures, said
it sold part of its stake in Yahoo! Inc. to finance new investments. That will help the company to triple group profit this year even though it
expects a pretax loss.
Softbank's U.S. holding company sold 3 million shares in the world's most-visited Internet directory for $410 million, reducing its stake to 28
percent from 30 percent and recording a capital gain of $390 million. Softbank, which has accumulated several billion dollars in paper
gains on a series of early investments in Yahoo! and other fast-growing Internet services, said it plans to set up a new fund to add other
online ventures to its portfolio.
''They've already won on their bet on Yahoo, so lowering their stake to wager elsewhere is probably the right move,'' said Satoshi Hirachi, a
software industry analyst at Societe Generale Securities (North Pacific) Ltd. ''They're throwing money at almost every Internet business with
any sort of potential, and I think a considerable number will turn out to be winners.''
Softbank said today the sale of Yahoo shares will contribute to a group profit of 32 billion yen ($271 million) in the year through March,
plugging a drain on earnings by its U.S. publishing subsidiary. The company expects to post a pretax group loss of 15 billion yen in part
because New York-based Ziff-Davis Inc. will record a one-time charge of about $57 million as it restructures its operations. Softbank and 48
of its affiliates last year recorded a profit of 10.3 billion yen.
Debt Concerns
The sale of Yahoo shares raised concerns among some investors and analysts that Softbank is struggling under a heavy burden of debt it
has accumulated in recent years as the result of series of high-priced acquisitions. It bought Ziff in 1996 for $2.1 billion.
When it reported half-year earnings on Nov. 11, Softbank said it had interest-bearing debt of 242.5 billion yen, versus assets of 800 billion
yen.
''They certainly have a lot of debt to service, and that may have left them with no choice but to sell some of their stake in Yahoo,'' said Yoshio
Inamura, a portfolio manager at Tokyo- Mitsubishi Asset Management Ltd.
The rising value of Softbank's Internet portfolio has pushed up the company's own share price 80 percent in the last 12 months and helped
it to pay for stakes in an ever-lengthening list of online ventures. The shares ended trading today at 7,980 yen, down 150.
As of last month the company had paper gains of almost $11.9 billion on investments in seven U.S. and two Japanese Internet companies.
Though it remains Yahoo's largest shareholder, Softbank's sale runs the risk of cooling investors' enthusiasm for the Internet, especially
with many industry watchers warning that such stocks are extremely overvalued.
Yahoo's shares, which have increased in value more than eightfold in the last 12 months, yesterday tumbled 11.67 percent. That's their
biggest percentage fall since Oct. 1.
Separately, Softbank raised to 10 billion yen from 8.45 billion yen its parent-company profit forecast for the year through March, citing a
recovery in personal computer sales to Japanese consumers and successful cost-cutting efforts.
--Gary Schaefer and Tak Kumakura in the Tokyo newsroom (813) 3201- |
