Softbank update!!
Softbank Corp. Benefits From Winning Bets on the Internet
Tokyo, Jan. 28 (Bloomberg) -- Softbank Corp., Japan's
largest distributor of personal computer software, is making a
killing in one of the newest and fastest-growing technologies:
the Internet.
Softbank stands to reap hundreds of millions from Yahoo!
Inc.'s agreement today to buy GeoCities for $3.9 billion in
stock. Softbank, which owns about 30 percent of Yahoo! and 22
percent of GeoCities, saw paper gains of about $1.24 billion
since yesterday as shares of the Internet companies surged on the
news.
The transaction is the latest example of how Softbank is
profiting from the early bets Chief Executive Masayoshi Son made
on the Internet while the medium was still in its infancy. Now,
Softbank has investments in nearly 70 companies stretched across
various areas of the Internet including stakes in E*Trade Group
Inc. and MessageMedia Inc., companies whose stocks have been
among the biggest beneficiaries of the Internet boom.
''It's a company that saw the potential in the Internet and
made some very good bets,'' said Robert Broadwater, managing
director of investment bank Veronis, Suhler & Associates.
Shares of Tokyo-based Softbank have climbed about 90 percent
in the past year, partly on investors' growing optimism about the
company's sizable Internet portfolio, analysts say. Softbank
stock rose 20 to 8270 yen.
''There's a growing acknowledgment among investors that
they've really made some good picks. Their profile has certainly
increased,'' said Peggy O'Neill, Internet analyst at Dataquest.
Softbank's 70-percent owned Ziff-Davis Inc. is also cashing
in on the Internet frenzy. Last month, it filed for an initial
public offering of shares that will track the performance of its
online business. Since then, Ziff-Davis stock has gained about 53
percent.
The Next Revolution
And Softbank isn't content to focus on just one area of the
Internet. The company's investments span various categories such
as Internet finance, community sites and directories.
''Masayoshi Son called it very early that the Internet would
be the next big revolution. He knew the wealth creation would be
significant,'' said Charles Lax, general partner in Softbank
Technology Ventures, a venture capital group backed in part by
Softbank.
Softbank Technology Ventures owns about 6 percent, or 1.88
million shares of GeoCities, according to Technimetrics Inc.
E*Trade, the No. 3 online broker that's about 27-percent
owned by Softbank, has seen its stock gain more than fourfold in
12 months; shares in Yahoo!, the No. 1 search directory, are up
12-fold; CyberCash Inc., a pioneer in Internet commerce software,
is up about 49 percent; and GeoCities has gained more than six-
fold since its initial public offering in August.
Since yesterday, Softbank's paper profit in Yahoo! alone
gained about $944 million to about $10.9 billion, while GeoCities
gained $298 million. E*Trade, which rose 15 15/16 to 99 1/2, made
Softbank about $249 million in paper profit today.
''They're pretty shrewd in their picks. Yahoo! is probably
their flagship investment and one that has really made them
prescient,'' said Dataquest's O'Neill.
Softbank hasn't taken a back seat either to the wheeling and
dealing that's driven many Internet companies to form alliances
and merge.
Softbank Technology Ventures was instrumental in getting
Yahoo! to make an initial investment in GeoCities a year ago, Lax
says.
''When you have these kinds of relationships, it helps
accelerate the growth of these companies dramatically and that's
value added. We're very aggressive about helping these companies
get together,'' Lax said.
Scouting Team
Softbank has had its hands in the Internet from early on.
Softbank became a partner in Softbank Technology Ventures, which
was formed in 1995 and made early investments in companies such
GeoCities in January 1997.
Since then, Softbank has been using the ventures group to
scout for Internet companies in which to invest. Typically, the
ventures group will make an initial investment and Softbank will
follow with its own.
''We act as a scouting team in conjunction with Softbank and
that allows them to get an early stage look,'' Lax said.
Together, Softbank and the ventures group have invested
about $1.5 billion in about 70 Internet companies, he said.
Softbank often adds to its investments by forming joint
ventures with the Internet companies. The company, for example,
together with Yahoo! formed Yahoo! Japan Corp., of which Softbank
owns 60 percent. Yahoo! Japan stock, which trades over the
counter, was at 13 million yen, more than six times the 2 million-
a-share IPO price in November 1997.
And Softbank and E*Trade have been solidifying their ties.
The companies are preparing to begin trading shares in Japan and
South Korea of a joint venture they own. In October, E*Trade and
InsWeb, an Internet insurance site in which Softbank is an
investor, agreed to create an online insurance content section on
E*Trade's Web site. Last August, E*Trade signed marketing
agreements with Yahoo! and Ziff-Davis to gain visibility on the
two content companies' Web sites |
