Vorige week schreven we over Softbank, het Japanse Internet bedrijf.
Softbank is via Ziff-Davis, de computer uitgever prominent aanwezig in de VS en daarbuiten, maar het interessantst zijn de (on)genoteerde deelnemingen in andere Internet bedrijven, Yahoo om er maar één te noemen.
Ik merkte dit weekend dat er nogal wat belangstelling voor Softbank bestaat onder onze lezers. Op het Forum is een uitgebreide discussie gaande. Het Amerikaanse blad Barron’s, waarover verder niets dan goeds, publiceerde net een stuk over Softbank. De teneur is al even positief als bij Inveztor.net.
Bijgaand vind u het, onder nadrukkelijke vermelding van copyright .
Internet Stock Softbank Heats Up in Japan Though ‘Net’s Still More
Concept Than Reality
By Neil A. Martin
Wall Street’s Internet fever may be infecting Japan — at least you
might get that impression from the rising stock price of the Tokyo-based
Softbank, one
of the world’s biggest investors in Internet companies.
Softbank’s common has been on a tear lately, outperforming the Tokyo
stock market by about 179% over the past six months. The shares closed
Friday at 18,230 yen — up 14% on the week, partly because of a bullish
report by Lehman Brothers’ Internet analyst in Tokyo predicting it could
rise another 185% over the next 12 months. The company’s American
depositary receipts, sold over the counter under the symbol SFTBF,
closed Thursday at 153, up 22 on the week and not far from its peak of
160 last April 9.
“The market has apparently failed to realize the true value of
Softbank’s total assets, as well as its vision to create a global
Internet ‘zaibatsu’ consortium,” says Lehman analyst Ravi Sarathy.
“Softbank’s stock may be likened to a hidden gemstone. Most analysis of
the company fails to explore beneath the surface-focusing only on the
value of the company’s stakes in publicly listed Internet investments.”
It’s certainly true that Masayoshi Son, Softbank’s hard-driving,
entrepreneurial founder, has been pumping money into various
Internet-type companies since it went public in 1994, leveraging the
company’s overvalued stock to buy stakes in Yahoo (28%), E*Trade (28%)
and Yahoo!Japan (50%). In
addition, Son took positions in more than 100 unlisted Internet
companies, a number of which plan to go public in the near future —
including Buy.com (20%) stake, E-Loan (10%), 1-800-Flowers.com (6%) and
InnsWeb (20%). All in all, Son’s Internet stake is worth close to $15
billion.
That’s what fueled Sarathy’s optimism. “Our 12-month price target is
equal to our full sum-of-parts valuation for the stock of 41,600 yen per
share,” he says. “We recommend that investors buy the stock
aggressively” with a targeted 185% from last week’s 18,230 yen.
Unrealistic? After all, most other analysts have far lower target
prices. Merrill Lynch’s Tokyo analyst, for example, has a 12-month goal
of only 18,000 yen.
Not necessarily, says Paul J. Fraker, portfolio manager with Brown
Brothers Harriman & Co. Fraker began buying Softbank shares last January
at around 8,500 yen and currently holds about $1.6 million in his 59
Wall Street
Pacific Basin Equity Fund.
“Some of the businesses Softbank has been nurturing will start up or go
public during the next year,” Fraker explains. “So some of the value
that is hidden from the market will become visible over the next 12
months.”
Perhaps. But the Internet is still more of a concept than a reality in
Japan. Exorbitant telephone-access rates have beached most ‘Net surfers.
On-line finance and commerce remain hamstrung by bureaucratic and
regulatory obstacles. And market expansion has been retarded by low
business and personal use of computers.
For example, fewer than 10% of Japanese offices make extensive use of
computers, compared with over 50% in the U.S., where more than half of
them are hooked into some kind of network (compared with only 9% in
Japan). In addition, less than 15% of Japanese homes have computers
(versus 63% in the U.S.) and few of them are wired to tap the Net.
True, the regulatory environment is changing. Discount on-line brokerage
services will be allowed starting next October. Home-computer sales are
growing. Internet access is moving toward flat-rate pricing, and
financial deregulation is accelerating services. But things change
slowly in Japan, even in the fast-moving world of cyberspace, and it is
unlikely that Softbank will see any direct bottom-line return from its
Internet activities in the near future.
In fact, Softbank has been forced to sell off some of its Internet
holdings. Even though it posted record net earnings of $312 million —
triple the previous year’s — in its fiscal year ended last March 21,
most of this financial performance was backed by stock sales. The
company sold three million shares of Yahoo last February, raising $410
million, of which roughly $390 million was booked as pure profit.
Too, the company’s U.S. publishing subsidiary, Ziff-Davis, is losing
money, and most of Softbank’s investment in technology is in companies
in the early stages of development. As a result, some analysts see lower
operating margins and earnings in the years ahead.
Although generally bullish about Softbank’s future growth in the on-line
Japanese financial sector, Mahendra Singh Negi, Merrill Lynch’s Internet
analyst in Tokyo, predicts the company’s consolidated net earnings will
plunge by more than 75% to $77.2 million during the current fiscal year
before recovering in 2001. Operating-profit margins will be in the 2%-3%
range by 2001, compared with 8.5% in 1997, Negi predicts. However, he
says, “the fact of the matter is that no one really knows how profitable
the Internet is going to be in Japan, but the biggest and best win, and
right now that’s Softbank.”
Michael Kraland 