Softbank

Overview

This note considers Softbank, the Japanese internet services, finance and media group.

It covers -

• introduction
• history
• shape
• studies

Introduction

The Softbank group traces its origins to a personal computer software distribution operation founded in 1981 by Masayoshi Son (1957- ). It leveraged its dominance in the Japanese PC software market to expand into publishing (notably through acquisition of Ziff Davis IT publications and a 69% stake in Ziff-Davis Inc) and exhibitions before moving into television production - undeterred by an abortive move with News Corp on Asahi TV - and internet-related services and finance.

Those services include a major stake in Yahoo! and major dialup, wireless, telephony and broadband operations. Buoyed by capital raising during the dot-com bubble Softbank built substantial venture capital, consumer credit, retail banking (notably the Aozora Bank) and sharetrading investments.

At its peak in 2000 Softbank's market capitalization was US$200 billion. It lost US$448 million in the second half of 2001, with capitalisation sliding to US$30 billion amid speculation that it would run out of cash by 2005. Son responded by reducing stakes in key assets such as Yahoo! and moving out of some holdings such as Aozora Bank.

The group now centres on connectivity (broadband and telephony) and publishing, along with a range of overseas investments and domestic operations (including recruitment services, venture capital, leasing and insurance).

Despite suggestions that Softbank is becoming a digital era keiretsu - a family of enterprises linked by cross shareholdings, loans, directorships and a corporate identity - it appears to be more of a loose (and opportunistic) assemblage, with little inter-enterprise support and coordination.

The Softbank corporate site is here.

History

[under development]

In 2005 to fend off a possible Livedoor takeover of Fuji Television (Japan's largest private television network), Softbank Investment Corporation - 47% owned by Softbank - acquired 14.67% of Fuji TV's voting rights by borrowing shares from Fuji TV shareholder (and Livedoor target) Nippon Broadcasting System.

In March 2006 Softbank agreed to buy Vodafone's Japanese mobile-phone unit for US$15.4 billion, an acquisition partly funded through sale of 0.6% of Yahoo Japan for US$199 million (leaving Softbank with a 41.3% stake in the Japanese portal operator).

Shape

Softbank is the largest shareholder in Yahoo Japan and has a 4% stake in Yahoo! Inc along with substantial stakes in Yahoo's European arms. It runs Japan's second-largest broadband internet service provider, after NTT. It has holdings in a wide range of internet and finance-sector businesses (some quite small), including 39% of Softbank Investments.

Studies

[under development]