* SoftBank CEO: Alibaba is strategic partner
* But no promise to hold stake forever
* SoftBank's 34.4 pct stake may be worth over $50 bln
* SoftBank says operating profit for 2013/14 up 36 pct
* Sees drop in operating profit after topping 1 tln yen
(Adds further CEO quotes and details from briefing)
By Sophie Knight and Yoshiyasu Shida
TOKYO, May 7 SoftBank Corp's
billionaire CEO Masayoshi Son said his company would not cash in
any of its stake in Chinese online retailer Alibaba when it
lists in New York in what could be the largest market debut ever
by a technology company.
SoftBank, whose acquisition sprees have left it holding
about $90 billion in interest-bearing debt and could pile on
much more, is expected to see its 34.4 percent holding in
Alibaba valued at more than $50 billion after the initial public
But Son said the Chinese company, which controls 80 percent
of online commerce in that country, was an indispensable
strategic partner that was unique in his mobile Internet empire.
"There are 1,300 companies in the SoftBank group but the
only ones I sit on the board of are SoftBank, Yahoo Japan and
Alibaba," Son said at a briefing following the release of
SoftBank's annual earnings on Wednesday.
SoftBank is the biggest shareholder in Alibaba and some
market watchers had speculated it would use the IPO to bank some
of his returns on the investment, initially just $20 million
plus a handful of additional fund injections that in total came
to less than $200 million.
SoftBank spent $21.6 billion to buy No.3 U.S. mobile
operator Sprint Corp last summer and is keen to follow
that up with an acquisition of No.4 T-Mobile US Inc.
Son said that, while SoftBank's percentage stake in Alibaba
may dip due to dilution when new shares are issued in the
offering, he would not be selling any of it off.
"Of course that doesn't mean we promise to hold it forever,
but for now we consider Alibaba a core strategic partner," he
Son said he first met Alibaba Executive Chairman Jack Ma in
2000 while on a hunt for investment opportunities in China. He
plucked the company from 20 other prospective firms after Ma
impressed him with a short presentation.
"I just liked the smell of the company... I invested with
the intention of having a long-term partnership where we
co-operated with each other and stimulated each other," Son
"When we invested in them they were generating zero revenue
and so I think that since then we had somewhat of a positive
influence on them."
The company said its holding in Alibaba added 66.78 billion
yen ($657.57 million)to its pretax profit for the fiscal year to
SoftBank posted a record 1.09 trillion yen operating profit
for the 2013/14 fiscal year ended on March 31, up 36 percent
from last year and just above the 1.07 trillion yen average of
14 analyst estimates according to Thomson Reuters StarMine.
That makes SoftBank the only Japanese company to top 1
trillion yen in operating profit apart from Toyota Motor Corp
and NTT DoCoMo, the country's biggest mobile
carrier by subscribers.
With earnings from its most recent acquisitions, including
Sprint, SoftBank surpassed both NTT DoCoMo and No.2 Japanese
carrier KDDI Corp in both sales and profit for the year
ended in March.
It also raised its sales target for the current year to 8
trillion yen from 7 trillion yen, citing a boost from its
acquisition of handset distributor Brightstar, but maintained a
previous goal of achieving 1 trillion in operating profit.
That would represent an 8 percent drop on the year as it
loses one-off benefits from the consolidation of some of its
units, including mobile games developer GungHo Online
Entertainment Inc. It is also slightly below analyst
projections of 1.09 trillion yen.
SoftBank is still reaping gains, however, from its domestic
mobile business, where operating profit grew 18 percent to 609
billion yen in 2013/14 after its incorporation of mobile game
app developer GungHo Online Entertainment and as it
continues to enjoy brisk sales of Apple Inc's iPhone
despite NTT DoCoMo beginning to offer the popular smartphone
from last September.
On Wednesday, Son reiterated his ambition to replicate in
the U.S. market his success in Japan in taking on larger rivals,
but declined to comment on progress on the proposal to buy
T-Mobile, which has hit regulatory snags.
"It's very clear that the No.1 and No.2 companies in the
U.S. dominate the market," he said, referring to AT&T Inc
and Verizon Communications.
"We think that we need to increase scale by investing in
infrastructure and increasing our spectrum holding. But I have
no comment as to how we will move forward with that at this
($1 = 101.5550 Japanese Yen)
(Editing by Edmund Klamann and Tom Pfeiffer)