What stocks to invest in = Softbank and ARM Holdings « PRACTICAL STOCK INVESTING



What stocks to invest in

a brief history of Softbank

Softbank is a Japanese company incorporated in 1981.  It has a non-establishment CEO, Masayoshi Son, notoriously opaque financials and a reputation as a maverick in its home country.  The company’s earliest successes came as an investor partnering with international internet companies entering Japan, like Yahoo and eTrade.  It was also an early supporter of now-huge Chinese internet businesses.

In 2006, it became an active business owner, entering the Japanese cellphone market by acquiring Vodafone’s network.  It revolutionized that business in Japan by rebranding as Softbank Mobile and launching a very successful discount cellphone service.

In 2012 it decided to employ the same strategy in the US, buying a controlling interest in Sprint.  Softbank appears to me tohave made the bold $21+ billion commitment thinking it could build a viable nationwide network by merging Sprint with T-Mobile.  Anti-trust regulators prevented that from happening, however, leaving Sprint in its current weak position and Softbank with a mess.

About a year ago, perhaps chastened by his Sprint error, Mr. Son announced he was stepping down as CEO and hired his apparent successor, Google executive Nikesh Arora.


Late last month Mr. Arora, who had been working to reduce Softbank’s financial leverage through asset sales, announced he was leaving the company, and Mr. Son that he was now planning to remain as CEO for perehaps ten more years.

This weekend we learned why–Softbank announced that Arm Holdings, the UK-based chip design firm, had accepted its all-cash bid of £24 billion ($32 billion), a 40%+ premium to its Friday close in London.

which Son is making this purchase?

Is it the prescient buyer of Alibaba and Vodafone Japan?    …or is it the sorely disappointed purchaser of Sprint?  Mr. Son is apparently arguing that development of the Internet of Things will generate a surprisingly large explosion of licensing fees and royalties for Arm.

More tomorrow.

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