Here is a Bloomberg story on Softbank, which has seen better days. Their stock has swooned lately, and they may be in some financial trouble. Whether this has any bearing on what is going on with AOL/NTOP/IDTC or not, I don't know.
Softbank Says Undecided on Whether to Sell Shares as Stock Extends Slide
By Jason Singer and Mari Murayama
Softbank Says Undecided on Whether to Sell New Shares (Update2)
(Adds new analyst comment in fourth and eleventh paragraphs.)
Tokyo, March 27 (Bloomberg) -- Softbank Corp., the Internet
investor whose shares have fallen 35 percent in less than a week,
said its board has not decided whether to sell new shares to raise
funds.
The statement comes after conflicting reports over the
weekend questioned whether the company's board had decided to hold
off on a reported plan to sell 300 billion yen ($2.8 billion) in
new shares by the end of April.
Investors have speculated Softbank is looking to raise money
to help fund its investments in fledgling Internet startups. At
the same time, analysts say financial markets may be souring on
the company's strategy of boosting its own market capitalization
based on expectations of future profit from its holdings in
Internet-related companies.
``Softbank's management is thought to be facing a turning
point,' said Yasuo Imanaka, an analyst at Commerz Securities
(Japan) Co., in a report. Imanaka today lowered his rating on
Softbank to ``hold' from ``buy,' citing ``a variety of risks'
which may prevent the company from meeting its need for cash.
A Softbank spokeswoman, who did not want to be named, said
she did not know whether the share sale was discussed at a board
meeting Friday, adding the company ``at this point' has not made
any official decision whether to carry out the plan.
Softbank shares fell as much as 14 percent Friday after the
Nihon Keizai newspaper reported, without citing sources, that the
Internet investor would go ahead with the share offering.
Softbank's shares fell 5,500 yen, or 6.3 percent, to 81,500
yen. The shares had been up as much as 4.9 percent in early trade
after the Nikkei reported the company's board had decided against
the sale.
Opportunities
``I assume they need to raise money because there are tons of
opportunities coming,' said Cairan Casey, portfolio manager for
Japanese equities at State Street Global Advisors in Tokyo, which
owns a 2.7 percent stake in Softbank mainly on behalf of other
investors. Still, the reported share sale may ``not be a good move
considering where its stock price is right now. There's the margin
overhang, where a lot of investors are getting squeezed out of the
market on call margins.'
Though investors say the likelihood of a share offering is
now in doubt, they remain certain the company will stick to its
investment strategy. Billionaire Masayoshi Son, whose Tokyo-based
holding company makes announcements almost daily of partnerships
with Internet plays, has made no secret of his intentions.
In late February, Softbank obtained the go-ahead from the
Japanese government to take over the government-controlled Nippon
Credit Bank Ltd, in cooperation with Orix Corp., Japan's largest
nonbank financial company, and Tokyo Marine & Fire Insurance Co.,
the nation's largest non-life insurer. As well, earlier in the
month, the company said it would triple the size of its planned
venture fund to 150 billion yen to respond to investor interest.
``I think (investors) need to be cautious to some extent
about the company's excessive capital investment and the move into
banking operations,' Imanaka said in his report.
Psychology
Softbank's shares soared 14-fold last year on investor
optimism its investments in Internet startups will begin to pay
off. Still, the shares are down 16.7 percent since the beginning
of January on concern Japan's biggest Internet investor may have
overextended itself and on a glut of share offerings from Japanese
technology companies.
``Investor psychology is now in a reverse cycle,' said
Soichiro Fukuda, an analyst at IBJ Securities Co. ``Investors have
rediscovered that the company needs a sizable amount of cash but
has few units to generate it.'
Softbank over the past five years has invested $2 billion to
build itself into one of the world's biggest supporters of
Internet ventures, with stakes in companies such as Yahoo! Inc.
and GeoCities.
The company said earlier this month it plans to invest as
much as $5 billion in Internet ventures worldwide in the next 16
months and will join with partners to put more than $1 billion in
Europe. Its expanded investment program is scheduled to unfold
over the next 12 to 16 months.
Analysts have expressed concerned whether Softbank's share
price is justified by the company's prospects. Goldman Sachs on
March 8 lowered its target price to 185,000 yen from 240,000 yen,
citing the change in the value of the company's venture capital
business in Japan, though it left unchanged its ``buy' rating on
the stock.
Cash Need
``They need cash for new investments,' said Laurent Halmos, a
director at Credit Lyonnais International Asset Management (Japan)
Ltd., which manages about $348 million in Japanese equities.
Softbank may also be trying to reduce debt, he said.
The firm may also need the cash for pending acquisitions of
Japanese financial companies or more Internet firms, said Makoto
Ueno, an analyst at Daiwa Institute of Research Inc. The company
may, however, find money managers willing to pass up the
opportunity to acquire new Softbank shares, long the darling of
Internet investors.
``Information and telecommunications stocks have lost
momentum,' said Tatsuhiko Takura, general manager of investment
research at Tokio Marine Asset Management Co., which holds
Softbank shares as part of the 900 billion yen equity portfolio it
manages for pension funds. |
