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If a Telecom like SoftBank has piles of money to spent gambling buying and selling international companies (ARM, Improbable, Supercell, and others), may be ther

If a Telecom like SoftBank has piles of money to spent gambling buying and selling international companies (ARM, Improbable, Supercell, and others), may be there is not enough competition in Japan. Do they have huge profits because of not having enough competition, or because they don't they have to return profits to the investors?

clock_tower 9y ago
Whatever their problem is, they're not the only ones to have it. Japan's been in the doldrums for decades; my understanding is that the country turns a profit, as it were, but doesn't have many opportunities for further investment. Of course, Japanese capital isn't the only capital that chases stupid stuff, especially not right now. We're all Japan these days. :)
KaoruAoiShiho 9y ago
SoftBank is not a telecom, it's a holding company like Berkshire.
- faragon 9y ago
  You can buy SoftBank telecom suscriptions and services [1], with its trademark, while e.g. Berkshire don't sell soft-drinks (Berkshire has Coca-Cola stock, but it is not Cola-Cola). So, in my opinion, it is not the same thing. Not even close. [1] https://en.wikipedia.org/wiki/SoftBank_Group https://en.wikipedia.org/wiki/SoftBank_Group
  - peterjlee 9y ago
    I think that's more of a branding thing. Telecom is just one of the things SoftBank does and it just happens to be more visible to consumers. Berkshire owns Geico but you wouldn't call Berkshire a insurance company.
    - genericpseudo 9y ago
      Totally would :-) They're an insurance company which monetizes through operating businesses rather than the traditional model of bancassurance.
  - dangrossman 9y ago
    You can buy Berkshire Hathaway real estate services, with its trademark. Their logo appears on signs outside private homes for sale all over the place. http://www.berkshirehathawayhs.com/ http://www.berkshirehathawayhs.com/ They also own 100% of a heck of a lot of subsidiaries. They're not just minority owners in a bunch of companies like Coca-Cola. https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berksh...
    - faragon 9y ago
      Sure, the point is what is their core business. E.g. Sony core business is electronics, despite having financial, entertainment, and other branches. Same thing for SoftBank: yes, it is a holding, but its main business is telecommunications.
      - tptacek 9y ago
        Berkshire's core business is insurance.
        genericpseudo 9y ago
        Specifically the two ends of the market; direct-to-consumer insurance (GEICO) and insuring things no-one else can, particularly reinsurance and muni debt (Berkshire Hathaway Assurance, Gen Re). If you're good at writing insurance it's essentially a great way of getting interest-free loans which they then spin into a huge pile of low-risk, cash-generating businesses (e.g. Duracell, Fruit of the Loom, See's Candies, to pick three Berkshire brands...).
objclxt 9y ago
> Do they have huge profits because of not having enough competition, or because they don't they have to return profits to the investors? Apple has huge profits and a cash pile despite a) having lots of competition, and b) returning profits to investors via dividends and share buybacks. Perhaps there are more options than the two you present?
peterjlee 9y ago
SoftBank is actually not the largest telecom company in Japan. Though SoftBank does a lot more than just telecom. Telecom just happens to be the more consumer facing business. Also, SoftBank made $50 billion by investing $20M in Alibaba 17 years ago.
- ekianjo 9y ago
  >Also, SoftBank made $50 billion by investing $20M in Alibaba 17 years ago That's a pretty solid ROI.
nandemo 9y ago
> Do they have huge profits because of not having enough competition, or because they don't they have to return profits to the investors? The second alternative doesn't make sense. You can't say a company has lots of profits because they don't return it to investors. Earnings (profits) is basically Revenue - Expenses. Whether the company chooses to retain earnings to reinvest in itself, or to return profits to investors (by paying a dividend or repurchasing stock) doesn't change the value of earnings. In any case Softbank does pay dividends to its investors. Japan's telecom used to be rather non-competitive, with 3 major carriers dominating the market, mandating locked phones and very likely colluding on pricing and fees. But since we got guaranteed number portability and MVNOs things have been better (I've just switched from Softbank to a MVNO, going from paying $70 monthly to about $25). Softbank's earnings come not only from domestic telecom but also from its stakes in Yahoo Japan (search/advertising, auctions, loyalty points etc) and Alibaba.

clock_tower 9y ago

Whatever their problem is, they're not the only ones to have it. Japan's been in the doldrums for decades; my understanding is that the country turns a profit, as it were, but doesn't have many opportunities for further investment. Of course, Japanese capital isn't the only capital that chases stupid stuff, especially not right now. We're all Japan these days. :)

KaoruAoiShiho 9y ago

SoftBank is not a telecom, it's a holding company like Berkshire.

faragon 9y ago
You can buy SoftBank telecom suscriptions and services [1], with its trademark, while e.g. Berkshire don't sell soft-drinks (Berkshire has Coca-Cola stock, but it is not Cola-Cola). So, in my opinion, it is not the same thing. Not even close. [1] https://en.wikipedia.org/wiki/SoftBank_Group https://en.wikipedia.org/wiki/SoftBank_Group
- peterjlee 9y ago
  I think that's more of a branding thing. Telecom is just one of the things SoftBank does and it just happens to be more visible to consumers. Berkshire owns Geico but you wouldn't call Berkshire a insurance company.
  - genericpseudo 9y ago
    Totally would :-) They're an insurance company which monetizes through operating businesses rather than the traditional model of bancassurance.
- dangrossman 9y ago
  You can buy Berkshire Hathaway real estate services, with its trademark. Their logo appears on signs outside private homes for sale all over the place. http://www.berkshirehathawayhs.com/ http://www.berkshirehathawayhs.com/ They also own 100% of a heck of a lot of subsidiaries. They're not just minority owners in a bunch of companies like Coca-Cola. https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berksh...
  - faragon 9y ago
    Sure, the point is what is their core business. E.g. Sony core business is electronics, despite having financial, entertainment, and other branches. Same thing for SoftBank: yes, it is a holding, but its main business is telecommunications.
    - tptacek 9y ago
      Berkshire's core business is insurance.
      - genericpseudo 9y ago
        Specifically the two ends of the market; direct-to-consumer insurance (GEICO) and insuring things no-one else can, particularly reinsurance and muni debt (Berkshire Hathaway Assurance, Gen Re). If you're good at writing insurance it's essentially a great way of getting interest-free loans which they then spin into a huge pile of low-risk, cash-generating businesses (e.g. Duracell, Fruit of the Loom, See's Candies, to pick three Berkshire brands...).

objclxt 9y ago

> Do they have huge profits because of not having enough competition, or because they don't they have to return profits to the investors? Apple has huge profits and a cash pile despite a) having lots of competition, and b) returning profits to investors via dividends and share buybacks. Perhaps there are more options than the two you present?

peterjlee 9y ago

SoftBank is actually not the largest telecom company in Japan. Though SoftBank does a lot more than just telecom. Telecom just happens to be the more consumer facing business. Also, SoftBank made $50 billion by investing $20M in Alibaba 17 years ago.

ekianjo 9y ago
>Also, SoftBank made $50 billion by investing $20M in Alibaba 17 years ago That's a pretty solid ROI.

nandemo 9y ago

> Do they have huge profits because of not having enough competition, or because they don't they have to return profits to the investors? The second alternative doesn't make sense. You can't say a company has lots of profits because they don't return it to investors. Earnings (profits) is basically Revenue - Expenses. Whether the company chooses to retain earnings to reinvest in itself, or to return profits to investors (by paying a dividend or repurchasing stock) doesn't change the value of earnings. In any case Softbank does pay dividends to its investors. Japan's telecom used to be rather non-competitive, with 3 major carriers dominating the market, mandating locked phones and very likely colluding on pricing and fees. But since we got guaranteed number portability and MVNOs things have been better (I've just switched from Softbank to a MVNO, going from paying $70 monthly to about $25). Softbank's earnings come not only from domestic telecom but also from its stakes in Yahoo Japan (search/advertising, auctions, loyalty points etc) and Alibaba.