SoftBank Continues To Be Valued At An Unwarranted Discount
What Softbank's Stock Price Tell Us About Alibaba's Valuation (And Why It Makes Yahoo Look Even Cheaper)
Jeremy Raper • 19 Comments
Jeremy Raper • 19 Comments
SoftBank: For Exposure To Alibaba, Look To Tokyo, Not Sunnyvale
Helix Investment Research • 31 Comments
Helix Investment Research • 31 Comments
Tue, May 10, 2:39 AM
- Credit Suisse (NYSE:CS) swung to a 302M Swiss franc net loss, as it plowed ahead with restructuring its investment bank, and cautioned that subdued market conditions could continue into Q2.
- Hit by a lower demand in mobile networks, Nokia (NYSE:NOK) reported a net loss of €513M, warning of further cuts and layoffs after the €15.6B acquisition of Alcatel-Lucent.
- SoftBank's (OTCPK:SFTBY) quarterly profit plummeted more than 36%, as turnaround efforts continued at Sprint, the struggling wireless carrier it bought in 2013.
- ING posted a 29% fall in Q1 profit, blaming the drop on higher regulatory costs in Europe and weakness in its financial markets unit.
Aug. 4, 2015, 11:23 AM
- On Sprint's (S +6%) earnings call this morning, SoftBank (OTCPK:SFTBY) chief Masayoshi Son joined in to reiterate his commitment to the struggling carrier.
- "I'm extremely excited about the turnaround of Sprint," he said. "I don't want to sell the company. I think Sprint is going to be a very good company, of which I will be very proud."
- As anticipated, Sprint fell behind T-Mobile in total users and dropped into fourth place among U.S. networks, but boosted its outlook for 2015 and detailed how it would pursue "densification" of its network with the help of both macro and small cells.
- "Japan has the best network in the world,” Son said. “To me, every time I come (to the U.S.) ... I say this network is not something you should be proud of. It’s actually really bad. It's not just Sprint; all networks are pretty bad. You have invented Internet; you have invented telephones ... but the network is not something that you should be proud of." He's working "with my engineers, every night" on Sprint's network design.
- That affects any plan like creating a competitive alternative to a video service like Verizon's upcoming Go90 service. "How would a customer benefit from a video bundle?" Son asked. "The network's congested, very badly; before you talk about video bundle, all of the four carriers have to cure the issue of congestion."
- "What Verizon is trying to do is what mobile providers have tried ... the track record of success of carriers around the world trying to bring these solutions has not been stellar," said CEO Marcelo Claure, noting any action Sprint takes there is likely to be through partnerships rather than buying assets.
- Claure noted the record low churn was broad-based: "What's nice is every single churn measure we do, we're coming down. The network experience is better, customer experience is better."
- Previously: Sprint up 11.9% premarket as it beats on EPS, boosts full-year guidance (Aug. 04 2015)
- Previously: Sprint reports FQ1 results (Aug. 04 2015)
- Previously: Sprint earnings: Management shakeup draws focus (Aug. 03 2015)
Aug. 3, 2015, 7:35 PM
- Early focus before Sprint's earnings report tomorrow morning was on what the carrier would say about its network transformation (and, secondarily, just what its customer totals are). Now some of that focus must shift to its biggest management shakeup under CEO Marcelo Claure.
- Sprint's now -3% in choppy after-hours trading after saying that former Telstra exec Tarek Robbiati would replace Joseph Euteneuer as CFO, and that Gunther Ottendorfer would join the firm as COO, Technology, with John Saw at his side as newly promoted CTO.
- Claure is now a few days short of a year after being named CEO, and says "One of my goals when I first arrived as CEO was to strengthen our management team."
- Euteneuer will leave the CFO post after an orderly transfer of responsibilities. "It was a mutual decision for him to leave at this point in Sprint’s transformation under CEO Marcelo Claure," says Sprint's Scott Sloat of the move. Euteneuer had been with Sprint since 2011.
- New CFO Robbiati was most recently at FlexiGroup, but was CFO of Australian telecom Telstra, along with holding positions at Hong Kong's CSL Limited and Orange.
- Along with the moves for Euteneuer, Robbiati, Ottendorder and Saw, Junichi Miyakawa -- who joined the company as technical COO last fall -- will become a senior technical adviser, serving as a liaison between Sprint and parent SoftBank (OTCPK:SFTBY) for network strategy.
- Robbiati takes on a new challenge in a struggling carrier that has posted a loss in five of the past six quarters -- with another likely tomorrow -- though Claure has turned around customer losses.
- Sprint's expected to post EPS of -$0.05 tomorrow, on $8.33B in revenues and EBITDA of $1.82B. Shares are down 19.3% YTD.
- Sprint statement
May 11, 2015, 3:57 AM
- SoftBank's (OTCPK:SFTBY) chief executive Masayoshi Son has anointed the head of the firm's Internet investment arm, Nikesh Arora, as a future successor, but confirmed that he won't be retiring yet.
- The announcement followed the company's latest earning results that beat forecasts, despite the continuing struggles to turn around U.S. unit Sprint (NYSE:S).
- For the fiscal year that ended in March, SoftBank said its net income rose 29% to ¥763.7B, while revenue jumped 30%. Operating profit of ¥982.7B beat the ¥900 billion target the company set in November.
- SoftBank, however, failed to provide guidance for the current year, citing a "large number of uncertain factors."
May 7, 2015, 9:30 AM
- Alibaba (NYSE:BABA) has jumped to $89.05 after posting an FQ4 beat amid low expectations. Along with the results, the company has announced COO Daniel Zhang is its new CEO, effective May 10; current CEO Jonathan Lu will stay on board as vice chairman, joining Joseph Tsai in holding that title. Jack Ma remains executive chairman.
- Revenue growth accelerated to 45% Y/Y from FQ3's 40%. Chinese marketplaces GMV rose 40% to RMB600B ($96.6B), a slowdown from FQ3's 49%. Mobile accounted for 51% of GMV, up from 42% in FQ3 and 36% in FQ2. Annual active buyers +5% Q/Q and +37% Y/Y to 350M.
- A stabilizing monetization rate (revenue as a % of GMV) helped make the FQ4 beat possible: After falling 35 bps Y/Y in seasonally strong FQ3 to 2.7%, monetization rate fell just 1 bps Y/Y in FQ4 to 2.17%. Making this possible: Mobile monetization rate rose to 1.73% from 0.98% a year ago. Altogether, mobile revenue rose 352% Y/Y and was 40% of China retail marketplace revenue vs. 30% in FQ3 and 12% a year ago.
- Segment performance: China retail commerce revenue +39% Y/Y to $2.11B. China wholesale +42% to $136M. International wholesale +19% to $190M. International retail +53% to $70M. Cloud computing/Web infrastructure +82% to $63M. Everything else (boosted by acquisitions) +169% to $243M. Taobao GMV +29% to $61B; Tmall GMV +62% to $35B.
- Financials: Free cash flow +143% Y/Y to $914M; it trailed net income of $1.25B. R&D spend ($491M) was 17% of revenue vs. 10% a year ago; sales/marketing ($408M) was 15% of revenue vs. 11%; G&A ($400M) was 14% of revenue vs. 4%. Soaring stock compensation expenses (driven by the IPO) contributed to the spending growth. Alibaba had $19.7B in cash at the end of March.
- Yahoo (NASDAQ:YHOO) has risen to $44.95 thanks to Alibaba. SoftBank (OTCPK:SFTBF) has seen the value of 797.7M-share Alibaba stake grow by over $7B.
- Alibaba's FQ4 results, PR
Feb. 10, 2015, 3:39 AM
- SoftBank (OTCPK:SFTBY) reported a sharp drop in its profit for the October-December quarter this morning, weighed down by the continuing struggles at Sprint (NYSE:S), the U.S. mobile operator it acquired in 2013.
- "Overall, SoftBank is doing well, but with Sprint...being in a tough situation, I think it will have a long battle to fight," said SoftBank's Chief Executive Masayoshi Son.
- The telecommunications giant posted FQ3 net income of ¥32.3B ($272.3M), down from ¥93.8B a year earlier.
Jan. 29, 2015, 9:37 AM
- Alibaba's (NYSE:BABA) FQ3 GMV rose 49% Y/Y to RMB787B ($127B). However, its monetization rate (revenue as a % of GMV) fell 35 bps Y/Y to 2.7%, leading revenue growth to only reach 40%. By contrast, monetization rate fell just 1 bps (to 2.30%) in FQ2.
- A major culprit: Mobile grew to 42% of GMV from 36% in FQ2 and 20% a year ago. And the mobile monetization rate (1.96% vs. 1.87% in FQ2 and 1.12% a year ago) remains well below the total rate. Mobile was 30% of revenue vs. 42% of GMV.
- A bright spot: EBITDA rose 34% Y/Y to $2.43B, better than expectations for 24% growth and driving the EPS beat. Heavy spending led EBITDA margin to slip to 58% from 60% a year ago. With stock compensation spend (IPO-driven) rising to 16% of revenue from 4%, and new business initiatives growing, operating expenses rose to 33% of revenue from 30%, and gross margin fell to 71% from 78%.
- China commerce revenue +32% to $3.6B (a slowdown from FQ2's 47%); international commerce (AliExpress-driven) +39% to $284M; cloud computing/infrastructure +85% to $58M; everything else (boosted by acquisitions) +266% to $309M.
- Taobao GMV (driven by smaller merchants) +43% to $80B; Tmall GMV (driven by larger merchants) +60% to $47B. Annual active buyers rose to 334M from 307M in FQ2 and 231M a year ago.
- Yahoo (NASDAQ:YHOO) is following Alibaba lower, and is now down 9% since posting Q4 results and announcing its spinoff plans.
- Alibaba's FQ3 results, PR
- Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
Nov. 4, 2014, 4:35 AM
- Troubles at Sprint (NYSE:S) has forced SoftBank (OTCPK:SFTBY) to slash its operating profit forecast, which it now expects to be ¥900B ($7.9B) in the 12 months through March 2015, 10% down from the ¥1T profit it previously estimated.
- The warning came as SoftBank reported that its second-quarter operating profit fell 23%.
- Yesterday, Sprint slashed its full-year adjusted EBITDA guidance to $5.8B-$5.9B from $6.7B-$6.9B and announced that it was cutting another 2K jobs.
Aug. 27, 2014, 9:52 AM
- In a revised F-1, Alibaba (Pending:BABA) discloses it had calendar Q2 revenue of $2.54B (+46% Y/Y), and net income of $1.99B (boosted by $1.1B in interest/investment income). Op. income was $1.1B (+27% Y/Y). Revenue growth accelerated from Q1's 39% clip, a figure that had disappointed some investors.
- Q2 free cash flow was $1.71B. Sales/marketing spend +70% Y/Y to $195M; R&D +68% to $315M.
- GMV was RMB501B ($81.6B), +17% Q/Q and +45% Y/Y (46% growth was seen in Q1). Mobile accounted for 32.8% of GMV (up from Q1's 27.4%), and mobile revenue more than doubled Q/Q to $400M.
- Annual orders +14% Q/Q to 14.5B; annual active buyers +9% to 279M; annual active sellers +11% to 8.5M; mobile monthly active users (MAUs) +15% to 188M.
- Alibaba's Taobao marketplace (focused on smaller merchants) had a Q2 GMV of RMB342B, +33% Y/Y. The Tmall marketplace (focused on larger merchants) had a GMV of RMB159B, +81%.
- Yahoo (YHOO +0.3%) is up slightly following Alibaba's release, which might be the company's last earnings update before its IPO.
- Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
Apr. 16, 2014, 4:08 AM
- Alibaba Group (ABABA) could file the prospectus for its U.S. IPO on Monday, Reuters reports, adding that the listing could be worth over $16B.
- The report comes after major shareholder Yahoo (YHOO) disclosed that Alibaba's Q4 net income surged 110% to $1.35B as revenue jumped 66% to $3.06B.
- Alibaba's results helped Yahoo's shares climb 6.8% in AH trading. In Tokyo, shares in SoftBank (SFTBF), which owns 37% in Alibaba, jumped 8.5%.
Feb. 11, 2014, 9:34 AM
- Sprint (S +7.2%) saw a net gain of 682K mobile platform subs in seasonally strong Q4 - 58K postpaid, 322K prepaid, 302K wholesale/affiliate. Though that figure is well below Verizon and T-Mobile's Q4 net adds, and moderately below AT&T's, it represents a turnaround from Q3's 95K net loss (includes a loss 360K postpaid subs).
- The #3 U.S. carrier is also guiding for 2014 adjusted EBITDA of $6.5B-$6.7B, up from a 2013 level of $5.4B and a 2012 level of $4.8B. Q4 adjusted EBITDA margin was 14.5%, up from the year-ago period's 10.3%.
- Mobile service revenue rose 2% Y/Y to $7.15B, equipment revenue (phone/tablet sales) rose 15% to $1.16B. SG&A spend was nearly flat at $2.44B.
- Postpaid ARPU was $64.11, down slightly from $64.24 in Q3 and $64.17 a year ago. Postpaid churn rose to 2.07% from 1.99% in Q3 and 1.98% a year ago.
- Sprint's wireline division saw revenue drop 9% to $859M. Its op. income fell to $23M from $71M.
- With parent SoftBank (SFTBF) willing to spend aggressively to improve Sprint's 4G coverage, Sprint has set a 2014 capex budget of $8B, up from a 2013 level of $7.5B and a 2012 level of $5.4B.
- Q4 results, PR
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