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Interesting read. For someone who has the time and patience to gather data against the author's arguments, I would highly recommend going to the source of the d

Interesting read. For someone who has the time and patience to gather data against the author's arguments, I would highly recommend going to the source of the data. SoftBank's financials - FY 2018-19[1]. I had a quick skim at the segments of the company and they have some interesting sources of revenue/profit which could provide some cushion: ARM, SoftBank itself (telecom), Sprint!, Yahoo Japan. Can someone more experienced than I am on financial matters check if they're in deep shit as the article suggests? [1]https://cdn.group.softbank/en/corp/set/data/irinfo/financials/financial_reports/pdf/2019/softbank_results_2019q4_001.pdf https://cdn.group.softbank/en/corp/set/data/irinfo/financial... Edit: spelling mistakes /facepalm

paganel 7y ago
> Can someone more experienced than I am on financial matters check if they're in deep shit as the article suggests? I'm no financial expert but "¥15.7tn ($143bn) of interest-bearing debt" is a lot of money, in case shit will end up hitting the proverbial fan (meaning a recession that will make refinancing a lot harder) then I don't see an easy way out for them. I also don't know what "¥27tn of total liabilities" really stands for, but that doesn't sound good either. Adding those two numbers up gives you about $300 billion that is owed by SoftBank in one way or another (debt + liabilities), that is a lot of money that cannot easily be covered by SoftBank's current assets in case they'll become hungry for liquidity. And I don't think the biggest part of that sum has a long maturity (think 10, 20 even 30 years), probably most of it it's due in the next few years (even though I may be wrong on this one, I admit).
- dskrvk 7y ago
  Debt is a type of liability, so the second number already includes the first one. That said, their liabilities are ~3x their current market cap, and that’s assuming it is real, which the article argues is likely far from being the case. So if the portfolio valuation starts to really slide down, it’s unclear how they’ll be able to pay down the debt or convince new creditors to lend them more.
- onlyrealcuzzo 7y ago
  I was under the impression most if SoftBank's loans are denominated in JPY and have almost 0% interest. If you have $143Bn in interesting bearing debt at like 0.1% interest -- as long as you buy anything that will inflate at the normal rate of inflation -- you should make a killing, right?
  - oarabbus_ 7y ago
    This is why Apple took (takes) out billions of dollars in loans despite having nearly a $1 trillion market cap of which a significant portion is cash. If you're a large corporation and have low-interest money offered to you, it's almost fiscally irresponsible not to take the loans. Depends of the tax laws of your home country, of course, and I don't know anything about Japan. But in the US, if you were to get offered a 0.1% interest loan, take the money now and figure out what to do with it later.
    - atomical 7y ago
      Buffett and Munger have said that they are having difficulty investing cash because they have so much of it. In this case it seems irresponsible to take loans. I don't see the point unless it's a tax dodge.
      - JamesBarney 7y ago
        For apple it was a tax dodge. A lot of the cash they had on hand was owned by offshore subsidiaries and if they moved it to U.S. company to pay out dividends or do a buyback that would trigger corporate taxation. So instead they borrowed against that cash hoping that the corporate tax rate would drop in the future and they could move the money and pay off the debt then.
      - onlyrealcuzzo 7y ago
        I hear everyone saying this. It seems like 12-years of global QE is gonna cause a massive spike in inflation. Everyone's valuing things as if there's been hardly any inflation since 2007. The reality is, there's 120% MORE narrow money (M1) today than there was in 2007. There's also 74% more board money (M3). Has there ever been a long period (12 years, in this case) where we've had only ~25% inflation with ~120% growth in the money supply? Naively, it seems like there's either too much money (not sure how you solve that) or everything is too cheap.
- docker_up 7y ago
  Softbank is essentially a PE fund now. Their numbers don't represent the same things that they do for a regular company. https://techcrunch.com/2018/11/06/softbanks-debt-obsession/ https://techcrunch.com/2018/11/06/softbanks-debt-obsession/

paganel 7y ago

> Can someone more experienced than I am on financial matters check if they're in deep shit as the article suggests? I'm no financial expert but "¥15.7tn ($143bn) of interest-bearing debt" is a lot of money, in case shit will end up hitting the proverbial fan (meaning a recession that will make refinancing a lot harder) then I don't see an easy way out for them. I also don't know what "¥27tn of total liabilities" really stands for, but that doesn't sound good either. Adding those two numbers up gives you about $300 billion that is owed by SoftBank in one way or another (debt + liabilities), that is a lot of money that cannot easily be covered by SoftBank's current assets in case they'll become hungry for liquidity. And I don't think the biggest part of that sum has a long maturity (think 10, 20 even 30 years), probably most of it it's due in the next few years (even though I may be wrong on this one, I admit).

dskrvk 7y ago
Debt is a type of liability, so the second number already includes the first one. That said, their liabilities are ~3x their current market cap, and that’s assuming it is real, which the article argues is likely far from being the case. So if the portfolio valuation starts to really slide down, it’s unclear how they’ll be able to pay down the debt or convince new creditors to lend them more.
onlyrealcuzzo 7y ago
I was under the impression most if SoftBank's loans are denominated in JPY and have almost 0% interest. If you have $143Bn in interesting bearing debt at like 0.1% interest -- as long as you buy anything that will inflate at the normal rate of inflation -- you should make a killing, right?
- oarabbus_ 7y ago
  This is why Apple took (takes) out billions of dollars in loans despite having nearly a $1 trillion market cap of which a significant portion is cash. If you're a large corporation and have low-interest money offered to you, it's almost fiscally irresponsible not to take the loans. Depends of the tax laws of your home country, of course, and I don't know anything about Japan. But in the US, if you were to get offered a 0.1% interest loan, take the money now and figure out what to do with it later.
  - atomical 7y ago
    Buffett and Munger have said that they are having difficulty investing cash because they have so much of it. In this case it seems irresponsible to take loans. I don't see the point unless it's a tax dodge.
    - JamesBarney 7y ago
      For apple it was a tax dodge. A lot of the cash they had on hand was owned by offshore subsidiaries and if they moved it to U.S. company to pay out dividends or do a buyback that would trigger corporate taxation. So instead they borrowed against that cash hoping that the corporate tax rate would drop in the future and they could move the money and pay off the debt then.
    - onlyrealcuzzo 7y ago
      I hear everyone saying this. It seems like 12-years of global QE is gonna cause a massive spike in inflation. Everyone's valuing things as if there's been hardly any inflation since 2007. The reality is, there's 120% MORE narrow money (M1) today than there was in 2007. There's also 74% more board money (M3). Has there ever been a long period (12 years, in this case) where we've had only ~25% inflation with ~120% growth in the money supply? Naively, it seems like there's either too much money (not sure how you solve that) or everything is too cheap.
docker_up 7y ago
Softbank is essentially a PE fund now. Their numbers don't represent the same things that they do for a regular company. https://techcrunch.com/2018/11/06/softbanks-debt-obsession/ https://techcrunch.com/2018/11/06/softbanks-debt-obsession/