Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: TobagoJack who wrote (156)	5/14/1999 4:52:00 AM
From: Edwin S. Fujinaka	Respond to of 6020

Although I thought that Softbank was trading at a discount to net asset value, much like a typical closed end fund, it's nice to see it verified by someone explicitly. One of the problems with trying to make an estimate yourself is that you can easily miss some major debit items. I assume that they have factored in the debt, but there are also dilution issues related to warrants and convertible bonds that may not be adequately factored in. Anyway, this is a field for the accountants. There is also the problem of valuing some of the closely held companies that are not publicly traded. I think that some of these may be carried on the books on a cost basis and they may be worth a great deal more if they are partially spun off as an IPO at the appropriate time. There is a lot of room for various forms of hanky panky besides the issue of the earnings generated by sister companies selling each other things or services. I see a trend where some companies are even selling a piece of the company in exchange for future advertising. Anyway this issue of valuing Softbank's underlying per share asset value is complex and subject to interpretation. In the end, we have to rely on the integrity and credibility of Son himself to some extent. Unlike some old line manufacturing companies,Softbank needs to enhance the value of their stock so they can make deals and alliances using their stock as trading currency. This is perfectly legitimate and is important during the Company building phase. At some later point, profitability may become a primary consideration, but that is in the future (perhaps the far distant future <G>) for these internet companies (other than IBM).

To: TobagoJack who wrote (156)	5/16/1999 12:59:00 PM
From: Edwin S. Fujinaka	Respond to of 6020

An old interview with Son that kinda gives a clue as to his philosophy and strategic thinking. Also, perhaps a little insight into how some of these American Internet Companies operate. Issued: February 15 ,1999 Internet shopping seen as driver for economic growth 50 Million Japanese Will Shop Online, Says Softbank Chief Masayoshi Son Online shopping has caught on rapidly in the U.S. and is making slow but steady headway in Japan. In a Nikkei interview, Softbank Corp. President Masayoshi Son, who invests in Internet businesses, discussed the future of online commerce. Q: The number of Internet users is said to have topped 60 million in the U.S. and 10 million in Japan. Do you think these figures will grow further? A: Of course. I believe the numbers will rise above 100 million in the U.S. and 50 million in Japan. I am confident the Internet will soon become one of the essentials in life, such as the telephone, television and automobile. A time will come when using computer networks for electronic commerce, personal communications and information gathering will just be a natural part of everyday life. Q: It is said online shopping really started taking off in the U.S. last year with 10% of overall passenger-car sales done on computer networks. What is your opinion? A: I think last year was indeed the start of the era of online shopping in the U.S. Online sales of passenger cars, personal computers, books and tours grew dramatically. And last Christmas, 70 million or so electronic cards were sent via computer networks using the service provided by Blue Mountain Arts Inc. Q: What are the reasons for the growth? A: The biggest reason must be the emergence of a number of online sales companies that offer convenience and inexpensive products. BUY.COM Inc., an online computer-products sales company, for example, has developed software that once a day checks the prices rival companies are offering, and has been underselling everybody since autumn 1997. With this service, the company now sells 200 million yen ($1.7 million) of products daily only one year after launching operations. Q: But online sales are said to account for less than 1% of total retail transactions in the U.S. Some people estimate online sales will only grow to claim 4-5% of the total, about the same level as mail-order business. A: I believe online sales will represent around 40% of all retail sales in the U.S. in the future. An online shop can offer so much more variety than a normal shop or a mail-order catalog, and it can offer products to consumers all over the world at low cost. For consumers, online shopping is a quick and simple way to order products at low prices. Q: What is your outlook for the development of online shopping in Japan? A: I estimate the current scale of Japan's online shopping market at 1/30th of the market in the U.S. In Japan, the network-usage cost is higher because local calls are charged according to the amount of time spent using the line. And not many online shops are offering attractive, inexpensive products. In addition, Japanese consumers are more conservative and suspicious toward the Internet than their U.S. counterparts. But, as seen in the case of mobile phones, Japanese people tend to flock to a product or service at an explosive rate once it starts getting popular. I think online sales will take off in Japan three years behind the U.S. I also believe a system of local calls will eventually be introduced in Japan that does not charge according to usage periods. Q: Some people say the expansion of online sales will have adverse effects on the economy because online shops employ fewer people than normal shops and their proliferation means fewer jobs will be available. A: I believe people will develop new services that cannot be offered online. For example, repair or consulting on assembly/operation of products bought online are likely to be in demand in the future. I think new jobs will be created because demand for personal service will rise even though online sales are expanding. I have no doubt online businesses will lead economic recovery in Japan.

To: TobagoJack who wrote (156)	5/16/1999 1:06:00 PM
From: Edwin S. Fujinaka	Read Replies (1) \| Respond to of 6020

A little more insight into Son's strategy. Sony is mentioned and they look very interesting for the long term too. I recently sold some Sony even though I believe they are a great technology Company. They may have some short term earnings shortfalls, but they are an interesting long term prospect. Issued: May 3 ,1999 HOLDING COMPANIES GAINING MOMENTUM Daiwa Securities Group Inc. has become the nation's first listed holding company. Others, including Nippon Telegraph and Telephone Corp. and Toshiba Corp. are planning to follow suit. Softbank Corp. became a holding company April 1 but continues to run its own business. In contrast, Daiwa and NTT, which plans to become a holding company in July, will only hold subsidiaries' shares and formulate groupwide business strategies. Operations are to be carried out by affiliated companies. Such corporate structures were made possible by a December 1997 revision to the Anti-Monopoly Law. The holding company formed by NTT is to conduct research and development, with the telephone business left to its subsidiaries. Toshiba intends to form a holding company for its group members. Sony Corp. plans to turn three of its listed companies, including Sony Music Entertainment (Japan) Inc., into wholly owned subsidiaries in January. The company is expected to adopt a system similar to Softbank's. The parent is to run the cutting-edge electronics business, with the three listed subsidiaries and other units taking over all other operations.