[Company analysis] Softbank Corporation (ソフトバンクグループ)

「Softbank Corporation (ソフトバンクグループ)」is Japan's largest IT company, and is mainly engaged in infrastructure businesses related to fixed-line telephones and the Internet. Recently, it established an investment company by launching a fund to invest in advanced IT companies. Besides, this company owns famous professional baseball teams, "Fukuoka Softbank Hawks". In terms of market capitalization,「Softbank」is 3rd largest company in Japan after「Toyota Motors(トヨタ自動車)」and「Keyence(キーエンス)」. The number of consolidated employees is approximately 76,866.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Softbank Corporation
Company name (Japanese)	ソフトバンクグループ
Date of establishment	Thursday, September 3, 1981
Headquarters location	〒105-7303 東京都港区東新橋1-9-1
Capital	238,772
Consolidated sales	9,602,236
Consolidated operating profit	9,158,765
Consolidated total assets	36,096,476
Consolidated capital	9,009,204
Capital adequacy ratio	25.0%
Consolidated number of employees	76,866

 

 

 

2. Summary and Features

 
「Softbank Group」is known in Japan as one of the three major telecommunications companies that could be comparable to「NTT」and「KDDI Corporation」. At present, this company acheived 25% of share in Japanese mobile communication market, which is the third largest in Japan after「NTT Docomo」and「au」. However,「Softbank」is not only a telecommunications business provider, but it is also a global IT company and investment company. In reality, this company has various business fields of IT, including voice and data transfer service business, Yahoo business, distribution business, and even semiconductor business.

 

Its origins go back to the「Nippon Softbank(日本ソフトバンク)」that was established in 1981 by the current president Son Masayoshi(孫正義). At the time of its establishment, this company focused on computer software distribution business. Then, in 1987, in collaboration with「Forval Corporation(フォーバル)」, they developed "LCR", which is the lowest-priced telephone company selection system. At that time, they established very interesting but effective business model. They distributed "LCR" with free of charge to small and medium-sized enterprises, instead, they receive commision from telephone company. With this business model, this company acheived great success.

 

In 1996, this company jointly funded with「Yahoo!」in the United States and started "Yahoo! JAPAN" service. In 1999, in collaboration with「News Corporation(ニューズ・コーポレーション)」, they launched a company that is the predecessor of the current「SKY Perfect JSAT Holdings Inc.(スカパーJSATホールディングス)」. During the peak of IT bubble,「Softbank」was the second largest company in market capitalization after「Toyota Motor Corporation(トヨタ自動車)」.

 

Then,「Softbank」purchased「JR communication(JR通信)」and also purchased Japanese subsidiary of「Vodafone Group Plc」with 1,750 billion yen in 2006. By this, they actually entered to the mobile phone business. And most of all,「Softbank」became the exclusive distributer for "iPhone" for the first time in Japan, they were able to grow into the third largest mobile communication company in Japan.

In 2014, they announced the world's first emotion-recognition personal robot, "Pepper" and began general sales the following year. 「Softbank」also started a video service in partnership with Netflix in Japan. In addition, in 2016, they purchased「ARM」, one of the leading company in semiconductor design industry in the UK for 3.3 trillion yen. Currently, this「Softbank Group」is recognized as a telecommunications company in Japan. But in fact, their telecommunications business accounts for only about 40% of total sales.

 

One of the special feature that「Softbank Group」has, is "Cluster of number ones" investment strategy. basically they invests in a candidate company that has the potential to become No. 1 in the world. Then, they returns the profits gained from new No.1 company, to invest new candidate. By conducting this continuously, they can create a virtuous circle that allow「Softbank Group」to own No. 1 company permanently.

 

 

 

3. Major Business

 

■ SoftBank Vision Fund, Delta Fund Business
Softbank's investment business represented by  "Cluster of number ones" .

■ Softbank business
They provide domestic mobile communication services and terminals. Especially, broadband services for individual customers and data communication services for corporate customers.

■ Sprint business
Through the「Sprint Corporation」 in the US, they sell mobile terminals and accessories, and provide fixed-line communication services.

■ ARM business
They develop and provide semiconductor processor IP and related software, tools, IoT platforms, and solution technologies.

■ Bright Star Business
Through the「Brightstar Corporation」, which is indirectly controlled by the「Softbank Group」, they are conducting terminal distribution business overseas.

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		8,901,004	9,158,765	9,602,236
Consolidated operating profit		1,025,999	1,303,801	9,158,765
Consolidated total assets		24,634,212	31,180,466	36,096,476
Consolidated net assets		4,469,730	6,273,022	9,009,204
Breakdown of sales	Japan domestic communication business	3,156,825	3,188,416	3,703,014
	Sprint business	3,459,142	3,403,820	3,533,834
	Yahoo business	841,581	866,627	923,539
	Distribution business	1,228,051	1,360,656	202,616
	ARM business	112,901	202,338	1,057,567
	Others	102,504	136,908	181,666