Question 1: What are your views of Softbank's recent internet-related diversification and its technology-based acquisitions?
In order to sustain their competitiveness, the enterprises usually conduct industrial reformation. For dispersing the risk of the enterprise, expanding their business scope and growth, or solving the perplexities in operation, the enterprises usually adopt diversified strategy. While operating, many aspects should be considered. Although diversification may make the enterprises grow, apply internal resources efficiently, reduce risks and increase more economic profits; however it could not guarantee the success after diversification as anticipated. When most enterprises proceed with diversification, the values they lose are much more than the ones they have created.
To achieve long-term growth, the Softbank started diversify into businesses that will expand the revenues of existing businesses and developing new businesses that will provide new sources of revenue in addition to the advertising revenues. In 2001, Softbank was divided into the following segments; IT-related distribution and e-commerce, financial services, publishing and marketing, internet infrastructure, technology service and broadcast media.
Softbank's Internet and technology acquisitions fall into two categories. First, in the area of media and marketing, Softbank owns 70 percent of Ziff-Davis, Inc. Second, in the Internet, communications and technology sectors, Softbank has inverted in some of the top Internet brands. These acquisitions have placed Softbank among the top Internet and technology players in the world.
The Group believes that these types of diversification and acquisition will strengthen its operating base. To realize this goal, it is possible that the Group will have to incur additional expenses to employ new staff, expand and upgrade its facilities, and to carry out research and development.
Moreover, it is anticipated that some time will be needed for these businesses to begin contributing stable revenues. Consequently, the Group's profitability may decline temporarily. In addition, there is...