February 7, 2008 / 6:26 AM / 12 years ago

Softbank says no plans to sell Yahoo Japan stake

TOKYO (Reuters) - Japanese telecoms and Internet group Softbank Corp (9984.T) said it has no plans to let go of its stake in subsidiary Yahoo Japan Corp (4689.T), in the face of Microsoft Corp’s (MSFT.O) $44.6 billion bid for Yahoo Inc YHOO.O.

But Softbank has not decided what to do with its stake in Yahoo Inc, its founder and president Masayoshi Son said on Thursday.

“We will consider the (Microsoft) bid in light of our overall Yahoo strategy,” Son said. “We have no intention of selling our Yahoo Japan stake.”

Softbank owns 41 percent of Yahoo Japan, and it also holds 3.9 percent of the U.S. search engine giant. Yahoo Japan is 33 percent owned by Yahoo Inc.

Microsoft’s bid comes as Softbank and its rivals NTT DoCoMo Inc (9437.T) and KDDI Corp (9433.T) look to partnerships with search engines to help win new users as the line between PCs and mobile phones blurs.

While Microsoft’s bid could raise Yahoo’s brand value, the Softbank-Yahoo partnership was important to both companies, Son told reporters in conjunction with the release of Softbank’s third-quarter earnings.

“Google (GOOG.O) is the common threat,” he said.

Asked if Softbank, which has partnered with Microsoft in Internet telephony, would consider a counter-bid for Yahoo Inc, Son said Softbank had no such plans right now.

“I’ve been asked by people in the company not to create more debt,” he said. Softbank’s interest-bearing debt totaled 1.66 trillion yen ($15.6 billion) at the end of December, the bulk of which came from borrowing to buy Vodafone Group Plc’s (VOD.L) Japan mobile unit in 2006.

MOBILE PHONES THE KEY

Mobile phones have been driving Softbank’s earnings, although operating profit rose by a smaller-than-expected 9.1 percent in October-December.

Softbank, the smallest of Japan’s three mobile carriers, launched new student discounts last week, the latest move in its price-cutting strategy to lure users from bigger rivals.

“In terms of stability, KDDI or DoCoMo may be stronger, but when it comes to change, it’s Softbank that leads,” said Tomomi Yamashita, senior fund manager at Shinkin Asset Management. “Softbank shares should surge over the short term,” he said, citing mobile phone sign-ups and the Microsoft bid for Yahoo.

In the business year that started in April, the company has grabbed more users than its rivals on a net basis, mostly from NTT DoCoMo, which controls over half of Japan’s mobile market.

In January it netted nearly twice as many new users as DoCoMo and KDDI combined.

But pursuit of market share has come at the cost of reduced revenue per user, which fell to 4,520 yen in October-December from 4,800 yen, the fifth straight quarterly decline.

Softbank reported an operating profit of 92.44 billion yen ($870 million) for the October-December quarter. That compares with estimates of 95.3 billion yen from Mizuho and 98.7 billion yen from Lehman.

Softbank’s net profit jumped more than sixfold to 46.73 billion yen, helped by a 57.2 billion yen extraordinary profit from Alibaba.com’s 1688.HK listing. Softbank held a 33 percent stake in Alibaba’s parent prior to the IPO.

Fifteen analysts polled by Reuters expect Softbank, which does not give full-year forecasts, to post an 18 percent rise in operating profit to 333 billion yen in the year to March.

Prior to the announcement, shares of Softbank, which have been traded heavily on news of Microsoft's bid for Yahoo Inc, ended the day up 6.2 percent against the benchmark Nikkei average's .N225 0.8 percent rise.

Additional reporting by Yoko Kubota; Editing by Mike Miller

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