Masayoshi Son, Chairman and Chief Executive Officer of SoftBank Corp.
Operating profit will be about 900 billion yen ($7.9 billion) in the 12 months ending March, the Tokyo-based company said today, compared with an earlier forecast of 1 trillion yen. SoftBank’s German traded shares fell 5.4 percent.
Sprint, acquired in 2013 for $22 billion, is eliminating jobs and changing plans under new Chief Executive Officer Marcelo Claure to help compete with faster growing rivals. SoftBank, the biggest shareholder in Alibaba Group Holding Ltd. (BABA), is counting on international growth as it confronts increased competition and a shrinking population in Japan.
“Sprint (S)’s result was poor, so it affected SoftBank’s performance,” said Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. in Tokyo. “Sprint is restructuring while also being aggressive in obtaining new subscribers. This will continue for a while.”
SoftBank also reported second-quarter earnings, which gained a boost from the initial public offering of Alibaba. SoftBank owns more than 30 percent of China’s largest e-commerce company, a stake that is worth about $80 billion.
Marcelo Claure, Chief Executive Officer of Sprint Corp.
Job Cuts
Shares of SoftBank rose 1.1 percent to 8,027 yen in Tokyo trading before the earnings were announced. The stock has dropped 13 percent this year while Japan’s benchmark Topix index has added 5.1 percent. Sprint shares have slumped 42 percent in New York this year.Sprint this year ended talks for T-Mobile US Inc., scrapping plans to create a stronger third-ranked U.S. carrier to compete with Verizon Communications Inc. (VZ) and AT&T Inc. (T)
The Overland Park, Kansas-based carrier announced yesterday plans to cut about 2,000 jobs, or 6.5 percent of labor force, and reduce other expenses after losing subscribers for an 11th straight quarter. The combined firings are estimated to save $400 million a year and are part of a broader plan to reduce annual expenses by $1.5 billion.
Customer Losses
“Sprint’s new management is focusing on increasing the proportion of prime customers, reducing the sub-prime subscribers by making selection criteria more strict,” Son said. “Sprint is expanding resources to capture customers and reducing short-term profit growth pace to prioritize long-term profit potential.”Monthly subscribers at Sprint fell by 272,000 in the quarter, including half a million phone customers leaving. The efforts to lure users with price reductions have taken a toll on profits, leading the carrier to lower its forecast for adjusted earnings in the year to Dec. 31.
In his first weeks on the job, Claure introduced a shared data plan with 20 gigabytes for $100 a month, twice the data offered by T-Mobile for the same price.
SoftBank has concentrated on acquisitions that provide content for its wireless operations, including adding control of Finnish gamemaker SuperCell Oy for $1.5 billion in 2013.
Last month SoftBank agreed to invest in Legendary Entertainment, producer of the “Godzilla” film, and buy DramaFever Corp., which offers Korean TV programs online for English-language viewers
Future merger and acquisitions for SoftBank will focus on Asian Internet companies with the company to aim for stakes of 30 percent to 40 percent, Son said today. Purchases of carriers will be on a case-by-case basis, he said.
SoftBank, founded in 1981, has stakes in more than 1,300 companies.
No comments:
Post a Comment