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To: fut_trade who wrote (3157)	11/23/1997 7:04:00 PM
From: Rational	Read Replies (1) \| Respond to of 27307

Peter: I had an impression that I posted the following stuff obtained from Infoseek. [I had posted it on a different thread.] Yamaichi made many denials about its problems earlier, before closing down. Sankar 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.

To: fut_trade who wrote (3157)	11/23/1997 7:11:00 PM
From: Bill Harmond	Read Replies (3) \| Respond to of 27307

>>How do you know Softbank had been reporting gains in stock prices as profits? Peter, they're probably not. Unless Japan has some creative accounting rules that we don't know about, Sankar's running off here. Companies don't report stock gains on the earnings line until they're actually realized. The chunk of Yahoo that Softbank sold previously was reported as earnings (as an extrordinary gain, not from operations), but investments are carried on the balance sheet (generally at cost), not on the income statement. The "Sankar Scenario" is fun to speculate about. The Softbank house of cards implodes, banks in Korea call back loans, Softbank dumps 14,000,000 shares of Yahoo on the public markets in a desperate effort to meet the loans...and thud, Yahoo at $6. Yahoo itself probably has the right to buy back the Softbank shares on a first right basis anyway. I'd love Yahoo to buy back Softbank's shares at $6! It would be one of the best things for Yahoo shareholders that could happen. Sankar's right about one thing, excessive debt can be a very bad thing.