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Technology Stocks : Softbank Group Corp

SFTBY 12.55

-1.1%

Jan 16 9:30 AM EST

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To: Edwin S. Fujinaka who wrote (164)	5/19/1999 11:45:00 AM
From: sunny	Read Replies (1) of 6020

Analogies between Softbank and CMGI: While reading the latest earnings announcement of 9984 it came to my mind that there are actually more analogies between those two (9984 and CMGI) then I originally thought. First of all they both got a "core business" thats no real core business any more: CMGI with its direct marketing business (that it recently sold to MSGI) and Softbank with it's Software and hardware distribution. Also the majority wownership of ZD makes them somewhat a publishing company. The direct marketing business of CMGI never really made them money. They lost money on it any quarter and funded it by selling stock in affiliated companies. Now they took the step and finally sold what has originally been their core unit because they adjusted the company to the fact that there core business isn't direct marketing any longer. It's the venture capital funding. Softbank's ZD and their ditribution unit both created huge losses in the recent past. So why don't they just sell the distribution unit to another distributor whose knowledge is focused on this business (and not on the venture capital biz)? and why don't they sell the majority of ZD to the public (and/or a different company)? I'm not sure about this being the right steps for the near future but the real value of 9984 is being created in its (VC) holdings. The other businesses just drag down earnings. Maybe this could be a step before going public in the States (spinning of either unit). Just a thought when following CMGI's recent developments. Then there is the venture capital business which I regard as the "real" business of CMGI and Softbank. Given the fact that 9984 owns a multiple of CMGI's holdings (and is valued only with a premium of about 50%) this should be considered as a real cash cow and room for future gains in market cap. The third area of both companies is the role of an internet incubator, which creates and gets use of synergies between wholly and minor owned subsidiaries. This is where the real value is being created and where the quality of both gets visible. CMGI with iCast, Engange, Planet Direct and so on...more to come especially regartding iCast. And Softbank with it's financial activities in Japan (ELoan, ETrade, Morningstar...) CMGI more and more pushes a development away from the former core business over a holding company right to getting an operating internet company. Could THIS be the way Softbank is headed to in the future? Comments appreciated. Regards and always happy investing sunny

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