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Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: Edwin S. Fujinaka who wrote (155)	5/14/1999 3:45:00 AM
From: TobagoJack	Read Replies (3) \| Respond to of 6020

On the positive side ...a clipping from Financial Times dated May 14th, 1999 INTERNET: Softbank goes on the promotion trail Internet investment group is overshadowed by its holdings, writes Alexandra Nusbaum A company whose share price has climbed 128 per cent this year should not need much promoting. But Yoshitaka Kitao, executive vice-president and chief financial officer of Softbank, the Japanese internet investment company, is busy with this seemingly unnecessary task. The share price has climbed on the back of general internet euphoria, to close at Y16,150 yesterday. In spite of this rise, the company trades at a discount to its public holdings, which include some of the biggest names on the internet, including Yahoo!, ETrade and GeoCities. The combined market capitalisation of Softbank's holdings is approximately $17bn, a 27 per cent premium to its market capitalisation of $13.4bn. Why should this be? "The market has not priced in Softbank's Japan investments," says Mr Kitao. In the past year, the group has taken stakes in a host of companies to tap Japan's burgeoning internet industry. According to Mr Kitao, Japan is approximately three years behind the US, but growing quickly. However, investors have not yet recognised the internet potential of Japan's financial services industry, which is set to boom after the government's scheduled deregulation of trading commissions on October 1. Softbank has made financial services a primary focus in Japan. It has leveraged its relationship with ETrade, the US online brokerage service, to launch ETrade Japan. The group has also invested in a network of related finance companies. For example, online investors can obtain stock and mutual fund information from Morningstar Japan; Forexbank will handle foreign exchange transactions; InsWeb will offer insurance; and ELoan will provide mortgages and car loans. GeoCities Japan will provide free web pages, and OnSale will provide online auctions . But, beyond the initial funding, it is difficult to understand, much less quantify, the value Softbank adds to its companies. Softbank says companies in its portfolio benefit from synergies with each other. For example, Yahoo!'s recent acquisition of GeoCities resulted from Softbank's matchmaking efforts. But, critics argue, successful companies can identify and approach acquisition targets themselves. Softbank's companies advertise aggressively on each other's websites, so heavy costs at one company translate to heady revenues at another and Softbank benefits at the consolidated level. However, none of this does much to build up the brand name. The group describes itself as a holding company, but its talent for identifying internet "stars" suggests that it is really a venture capital company. Mr Kitao disagrees: "We are not venture capitalists. We fund companies in the second stage, before they go public." Softbank has come a long way since 1981 when Masayoshi Son, Softbank's chairman, founded the company as a software distributor. Its latest company slogan, calls for Softbank's combined holdings to achieve a market value of Y10,000bn by 2010 - roughly five times its current valuation. Initial public offerings are planned for three US and two Japanese companies and it plans to appoint at least two outside directors. Then perhaps the market will value it more highly.