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Fri, 06 Dec 2019
10:00:05 +0000
SoftBank to Have ‘Last Laugh’ on WeWork Deal, Bernstein Says
(Bloomberg) -- SoftBank Group Corp.’s massive investment in WeWork triggered a multi-billion-dollar writedown and a rare apology from founder Masayoshi Son. But one analyst argues the deal is likely to work in the end and SoftBank will have the “last laugh.”Chris Lane of Sanford C. Bernstein says WeWork can have a bright future if SoftBank overhauls the business plan and more carefully focuses on the evolution of the corporate office market. He likens WeWork’s business model to Starbucks’s, where branding, consistency and global scale give it an advantage over the competition.Lane argues WeWork can achieve profitability if it pulls back on extraneous areas and calms a frenetic pace of expansion to focus on filling up existing space. That will allow it to grab an estimated 8% of an emergent market for pre-fitted offices for corporate clients, almost like a white-label tech gadget or home appliance.“We think investors should think of the basic business as being similar to Starbucks,” Lane wrote in a 21-page research report. “While profitable, the scale of profits that can be generated from a single site is small. Starbucks as a corporation only makes sense if you plan to open thousands of outlets.”It’s a contrarian take on a WeWork deal that has been widely viewed as a fiasco. After SoftBank invested in the co-working startup, its planned initial public offering fell apart as investors balked at its enormous losses and conflicted governance. Son conceded “there was a problem with my own judgment” as he announced the writedown last month. SoftBank has put about $14 billion into a startup that’s now valued at less than $8 billion.The Japanese company’s shares are down about 30% from their peak in April. They were little changed on Friday.After discussions with management, Lane explains they see an opportunity for WeWork to move beyond the niche of providing space for entrepreneurs to offering flexible real estate for a broad range of companies. He calls this “managed space as a service” and compares it to “software as a service,” which is the way many companies now buy from Microsoft Corp. and Salesforce.com Inc. WeWork, Lane says, sees the potential to make $500 per month on memberships as “an on-going annuity,” far more than software generates.SoftBank named Marcelo Claure, the former chief executive at Sprint Corp., executive chairman of WeWork and put him in charge of the turnaround effort. Under his leadership, Lane says the company will be able to focus on profitability by stopping any incremental expansion, filling its existing space and slashing overhead by getting rid of expansion staff and non-core businesses. WeWork’s ability to gather data about office-use and optimize layouts -- while not entirely substantiated -- could prove disruptive to the industry, he added.He estimates that WeWork’s revenue will rise from $720 million a quarter to about $1.5 billion if it can push occupancy to 90% on its current portfolio. Once profitable, WeWork will once again try to go public, perhaps in 2023, and then raise additional capital to resume expansion, albeit more slowly than before.With a discounted cash flow model, Lane projects WeWork would have an enterprise value of $28.8 billion in 2025. That would make SoftBank’s 80% stake worth about $19.1 billion, roughly 40% more than the estimated $13.8 billion the company and its Vision Fund have invested.“We believe WeWork’s valuation is justified if you believe in the long-term, ‘office space’ will be a managed service outsourced to professionals – and that WeWork will be the leading global player,” Lane wrote. “Despite the huge embarrassment WeWork has been for SoftBank this year, we suspect SoftBank will have the last laugh when they bring the company back to market in a few years – bigger and profitable.”(Updates with shares in the sixth paragraph.)To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net;Takahiko Hyuga in Tokyo at thyuga@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Thu, 05 Dec 2019
16:54:57 +0000
Elizabeth Warren Wants to Spoil the Megamerger Party
(Bloomberg Opinion) -- The merger floodgates broke open five years ago, and now U.S. Senator Elizabeth Warren wants to close the hatch. Her proposed bill to substantially restrict big corporate tie-ups is more a presidential campaign statement than viable legislation — and it certainly won’t score her any more points with the Wall Street crowd — but she is calling attention to the maniacal pace of dealmaking in corporate America and the need to modernize antitrust laws that have permitted some recent problematic transactions.More than $7 trillion of takeovers of U.S. companies have been announced since this day in 2014 — 52,694 companies to be exact.(1) That compares with just $4.4 trillion of deals in the previous five-year period. The transactions grew over time as balance sheets flush with cash and income statements desperate for growth created a perfect storm, which more often than not was stoked by pliable regulators. The Walt Disney Co. acquired 21st Century Fox Inc.; Charter Communications Inc. bought Time Warner Cable Inc.; CVS Health Corp. took over Aetna Inc.; Marriott International Inc. merged with Starwood Hotels & Resorts Worldwide Inc.; and T-Mobile US Inc. is trying to buy Sprint Corp. Those are just some of the more recognizable names. Warren, one of the top-polling candidates heading into the Democratic primaries, wants to ban deals in which one company has annual revenue of more than $40 billion, or both businesses generate more than $15 billion in sales, according to a draft of the bill reviewed by Bloomberg News. (A notable exception would be companies facing insolvency.) That could effectively prevent every top airline, insurer, manufacturer, oil producer, retailer, technology platform and other conglomerates — perhaps even Warren Buffett’s M&A vehicle, Berkshire Hathaway Inc. — from making any acquisitions. It would sound the M&A death knell. The idea, however, is unlikely to gain broad support among lawmakers.Even so, it’s hard not to notice the rising drumbeat of politicians concerned about overreach by corporate giants, particularly those in the tech field. Senator Amy Klobuchar, another Democratic presidential candidate, plans to introduce separate antitrust legislation soon, Bloomberg News reported, citing a person familiar with the matter. (Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent of Bloomberg News and Bloomberg Opinion, is also campaigning for president.)For the Trump administration’s part, the U.S. Justice Department is already investigating whether tech giants — namely Apple Inc., Amazon.com Inc., Facebook Inc. and Google — are using their unchecked power to engage in harmful business practices. But as I wrote in July, if regulators are so concerned about protecting consumers from tech overreach, their glowing endorsement of T-Mobile’s takeover of Sprint is a funny way of showing it; it will shrink the U.S. wireless market from four to three major carriers and remove a company that’s helped to keep customer prices in check.Antitrust regulation under President Donald Trump has at times created questionable optics. Makan Delrahim, the Justice Department’s top antitrust enforcer, seemed to switch his stance on AT&T Inc.’s takeover of Time Warner Inc. as Trump railed against the deal. Time Warner was the parent of CNN, which Trump views as his personal nemesis. (I’ve argued that whatever the case, scrutiny of the megamerger was warranted considering the broad market power it gave to AT&T as media companies without such scale struggle to compete.) By comparison, Disney and Fox, which was controlled by Trump pal Rupert Murdoch, closed their megadeal with few regulatory hiccups. Warren has criticized other giant deals, such as the merger of SunTrust Banks Inc. and BB&T Corp. and the combination of seed makers Bayer AG and Monsanto Co. Given that they aren’t household names, though, most Americans are unfazed by or unaware of such deals, even though they may feel the effects later. Her bill would direct the government to take into account not just whether a merger will lead to higher prices but also what the impact might be on workers, privacy and industry innovation. To justify the cost of buying another large company, dealmakers tend to come up with ambitious estimates of synergies, a euphemism for layoffs. It’s clear that the meaning of “harm” needs to be expanded in the antitrust sense, and laws need to take a more holistic view of the potential consequences of M&A as the lines between industries continue to blur. The Big Tech factor also needs to be weighed, as some deals are being done in part to respond to companies like Amazon that are spreading their tentacles into new areas. On Wednesday, TV-network operators CBS Corp. and Viacom Inc. completed their own merger, a bid to cut costs and create more scale to compete against a new roster of even more powerful media giants: Amazon, Apple, AT&T and Disney. Even then, ViacomCBS Inc., as the merged entity is now called, may not be big enough, and so it may be only a matter of time before it gets swallowed. Warren’s overly broad proposal likely isn’t the answer. But Democrats do seem ready to at least try to rein in a market that’s gotten out of hand. For dealmakers, this may be last call at the M&A party.(1) Data compiled by Bloomberg as of Thursday morning. Excludes terminated deals.To contact the author of this story: Tara Lachapelle at tlachapelle@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Wed, 04 Dec 2019
16:30:04 +0000
Sprint (S) Down 7.3% Since Last Earnings Report: Can It Rebound?
Sprint (S) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
Wed, 04 Dec 2019
14:30:02 +0000
Are Options Traders Betting on a Big Move in Sprint (S) Stock?
Investors need to pay close attention to Sprint (S) stock based on the movements in the options market lately.
Tue, 03 Dec 2019
14:23:02 +0000
T-Mobile (TMUS) Activates Nationwide 5G Network Coverage
T-Mobile (TMUS) hits a significant milestone by becoming the first telecom carrier to deploy nationwide 600 MHz 5G coverage across the United States.
Tue, 03 Dec 2019
11:08:22 +0000
Here’s when, and where, the other big carriers are deploying 5G in Mass.
After Verizon launched its 5G network in Fenway, other major U.S. mobile phone carriers are joining the race to deploy the fifth generation of mobile communications in the Bay State.
Mon, 02 Dec 2019
19:39:39 +0000
Where you should invest your money in the next decade: strategists
Here's how to think about investing over the next decade.
Mon, 02 Dec 2019
15:55:07 +0000
What The Sprint, T-Mobile Merger Trial Means For Investors
With a lawsuit filed by states seeking to block the $26.5 billion merger between T-Mobile Us Inc (NASDAQ: TMUS) and Sprint Corp (NYSE: S) set to go to trial Dec. 9, key questions remain for investors. Bank of America Merrill Lynch analyst David Barden spelled out in a note to investors what they should look for ahead of the telecomm merger trial. Will A Settlement Be Reached? "The most debated point, based on our conversations with investors, is not the strength of the states’ case against the deal (most agree it is strong), but rather the will of the states to see this through to litigation," Barden wrote in a note.
Mon, 02 Dec 2019
01:35:37 +0000
Palm Oil’s Scorching Rally About to Burn Its Top Customer
(Bloomberg) -- Palm oil’s meteoric rally in the past few weeks will almost certainly come with a cost -- shrinking sales to its largest customer.India, the world’s biggest buyer, will shift some purchases to other edible oils this winter after palm’s surge of about 30% from last month’s low. Palm’s discount to top rival soybean oil has contracted to the smallest in almost a decade, reducing its traditional appeal as a cheaper vegetable oil.“Higher prices are a deterrent for buyers,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental. “The Indian market was flush with oil before this rally started heating up. That’s why there’s no rush to buy.”While India typically reduces its imports of palm oil during the three months starting December, a bigger than usual decline in sales to the South Asian nation could dent palm’s rally. India mainly imports palm from Indonesia and Malaysia, the world’s largest producers.Palm oil prices have surged since July on expectations Indonesia will boost biodiesel consumption, with benchmark futures in Kuala Lumpur outperforming soybean oil traded in Chicago and the Bloomberg Commodity Index. Futures capped their best weekly advance since 2016 in the five days to Nov. 22.Indian imports may slump about 15% in the three months from Dec. 1 compared with a year earlier, according to Thiagarajan. Sathia Varqa, owner of Palm Oil Analytics, and G. G. Patel, managing partner of GGN Research, estimate that purchases will drop by 7.5% to 2.2 million tons.The South Asian nation, which imports about 70% of its edible oil, usually cuts back on palm in winter because the cold solidifies the oil and turns it cloudy. Users tend to switch to other oils that look transparent and don’t crystallize.Spread ContractsThough palm is still cheaper than soybean oil, its spread has narrowed to about $18 a ton from $150 in October. That shrinking discount to soyoil is likely to prompt buyers to switch over, Palm Oil Analytics’ Varqa said.Still, those desperate for palm will have little choice but to buy at higher prices. Some companies postponed purchases amid a spat between India and Malaysia last month and were caught off-guard by the rally, said Rajesh Modi, a trader at Sprint Exim Pte in Singapore. Buyers wishing to re-stock will want to do so before export levies in Malaysia and Indonesia kick in next year, he said.“They’re waiting for prices to fall and then will buy hand-to-mouth,” Modi said. “For two months they held back aggressively and just bought only minimum levels. Now they don’t have much stock and don’t have a choice.”(Updates palm oil’s spread to soyoil in 8th graph)\--With assistance from Pratik Parija.To contact the reporters on this story: Atul Prakash in New Delhi at aprakash51@bloomberg.net;Anuradha Raghu in Kuala Lumpur at araghu3@bloomberg.netTo contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Atul Prakash, James PooleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Fri, 29 Nov 2019
13:17:01 +0000
Telecom Stock Roundup: Sprint's Omni Launch, Verizon 5G Trial Run & More
While Sprint (S) launches cloud-based commercial phone service dubbed Omni, Verizon (VZ) initiates trial run for dynamic spectrum sharing in 5G technology.
Wed, 27 Nov 2019
14:30:16 +0000
7 5G Stocks to Buy Now for the Future
[Editor's note: "7 5G Stocks to Buy Now for the Future" was previously published in August 2019. It has since been updated to include the most relevant information available.]Since I last wrote about the four best 5G stocks to buy as the trend heated up, the sector has touched new highs. The companies benefited from telecom companies rolling out 5G wireless. That trend is not only heating up, but is accelerating. AT&T (NYSE:T) will offer a fixed-wireless-access solution later this year, letting customers get 5G internet at home. Beating AT&T in the 5G race is Verizon (NYSE:VZ), which officially became the first major U.S. carrier to offer 5G cell service. * 7 Stocks to Buy in December Verizon's victory puts pressure on telecom firms to accelerate their investments in the 5G buildout -- or risk falling behind.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere are seven 5G stocks that should rally in the future as the rest of the sector keeps heating up. 5G Stock to Buy: Ciena Corporation (CIEN)Source: Shutterstock Ciena Corporation (NYSE:CIEN) stock rebounded from near-$33 lows in May after reporting second-quarter results June 6. The company reported revenue growing by 18.5% to $865 million. CIEN stock's adjusted earnings per share was 48 cents. Although the company faced tougher year-over-year comparisons, investors bid the stock to yearly highs above $46. In the last few quarters, the company reported a growth rate a few points above the long-term average of 6%-8%. Beyond this year, growth will revert to that 6%-8% range. And EPS growth of 20% a year is sustainable.Ciena acquired TeraXion for $32 million in 2016, gaining control of its high-speed photonics components, which have enabled Ciena to unroll optical chipsets. This move also gave CIEN the execution capability around TeraXion's electro-optics portion of the drivetrain as well as the company's silicon photonics.The rollout of 5G had a positive impact on the CIEN stock's most-recent quarter. And Ciena is highly engaged with its customers, especially at the optical project level. With that level of involvement with the largest tier one companies in North America, expect revenue to grow extremely well for the foreseeable future.Assuming a reasonable five-year compound annual growth rate of 7.1%, CIEN stock has an upside of over 10%. Cisco Systems (CSCO)Source: Shutterstock Cisco Systems (NASDAQ:CSCO) stock's near-term growth will come from being the world's largest secure domain name system platform, though the data center is another source of core growth. Cisco has around 35 data centers that are growing monthly, as the company expands its cloud. It has 100 million daily users on its platform, yet the company wants to be a bigger player in 5G in the future.On July 9, Cisco announced that it would buy optical component maker Acacia Communications (NASDAQ:ACIA) for $2.84 billion. In doing so, the telecom equipment supplier will widen its addressable market in the 5G space. And because service providers will put upgrading to 5G on their roadmap, CSCO will have to upgrade its optical components, too. As global internet traffic triples into 2022, Cisco will have a way to sell the hardware customers need to support all that data movement. * 7 Stocks to Buy in December Acquiring Acacia gives Cisco the needed expertise in metro, long-haul and undersea data movement. Previously, the company's optical portfolio covered only short-range data center connections.CSCO's integration of Acacia strengthens its positioning for 5G in the future. Acacia already makes many of the optical interconnect modules in Cisco's equipment. But in the future, the demand for high-speed interconnect will increase rapidly. Nokia (NOK)Source: Shutterstock Nokia (NYSE:NOK) reported fiscal second-quarter results that beat consensus estimates. The company has benefited from new 5G deal wins. Helped by improving product competitiveness, the company has an impressive 50 commercial 5G deals.Nokia is well-positioned to be a 5G player in the future. As Nokia sells 5G radio to customers, it is also selling other Nokia products. Not only that, but NOK is building its 5G business by converting all of its 4G LTE customers -- it has over 300 commercial 4G customers who need help transitioning to 5G over the next 10-20 years.At a forward price-to-earnings ratio of 13, Nokia is not valued as a strong 5G player for the future. Markets are making a mistake ignoring this company's strong prospects.As many countries move quickly to deploy 5G, management may raise its guidance. Now, operators expect it will take four or five years after the initial rollout to get 5G deployed to 75% of their customers. That suggests Nokia's 5G growth acceleration is still in its early stages. NXP Semiconductors (NXPI)Source: Shutterstock NXP Semiconductors (NASDAQ:NXPI) has pivoted its business towards the automotive and 5G market over the last few years. Strong 5G deployment in the last few quarters assures the company's positioning in the space. Its second quarter, posted July 30, met consensus estimates. This is due partly to the benefit of a large mobile customer, but the higher revenue from the customer also led to lower deployment in the current Q3. To adjust for the uncertainties, NXPI lowered its Q3 revenue guidance to $2.21 billion-$2.27 billion. This is below the $2.35 billion estimated revenue.NXPI stock fell to as low as $96.11 by Aug. 5, only to recover somewhat when it closed recently at around $100. Management is bullish on the outlook for 5G but is assessing the potential near-term slowdown in the industry. With investor expectations lowered, investors have a chance to buy NXPI stock at a 15 times P/E and 11.3 times forward earnings. In doing so, shareholders are positioning themselves for the next wave of 5G spending. * 8 Dividend Aristocrat Stocks to Buy Now No Matter What Currently, NXP Semiconductors is benefiting from the growth in multi-input and multi-output (MIMO) deployment, where customers are expanding their capacity associated with their installed infrastructure. In the future, customers will move to 5G deployments. And from there, they may upgrade that capacity through software deployments to facilitate 5G. So indirectly, MIMO is driving revenue higher in the short-term. And as 5G ramps up more strongly into 2020, investors should get rewarded within a year. T-Mobile (TMUS)Source: Shutterstock In the telecom carrier space, T-Mobile (NASDAQ:TMUS) stock is creating a bigger and bolder competitor through its Sprint (NASDAQ:S) acquisition. Odds of the merger improved after the U.S. Department of Justice and the FCC gave the firms clearance for the deal. But first, Sprint must divest its pre-paid business and also sell its 800 MHz spectrum license.While T-Mobile expects to deliver $43 billion in synergies from the deal, the 5G efficiencies from the merger will interest investors most. Looking into the future, T-Mobile is committed to covering 97% of the U.S. population with 5G in three years. In six years, 99% of the population will get 5G coverage. This aggressive timeline is possible because T-Mobile will leverage its 5G network.Currently, T-Mobile is deploying a 600 MHz and millimeter wave spectrum, and the former will become the foundation for its nation-wide 5G network. Once 5G smartphones are available, the company will launch 5G on 600 MHz later this year.T-Mobile's growth will also come from its broadband business. It's goal is to reach 9.5 million in-home broadband subscribers by 2024. This complements the cost synergies, with $4 billion coming from the network division, $1 billion from sales, services and marketing, and $1 billion from the back office. With consistent customer growth and higher efficiencies ahead, it is no wonder that TMUS stock is in an uptrend in 2019. Verizon Communications (VZ)Source: Shutterstock Verizon, whose shares also offer a dividend yielding 4.1%, is another 5G stock to buy for the future. Its focus on the fiber deployment gives it this edge. VZ expects to have 5G coverage in 30 cities by the end of the year.Verizon's capital expenditures will support the buildout of its 5G Ultra Wideband network. For the full year 2019, capital expenditure will be in the range of $17 billion-$18 billion. More impressive is the speed that VZ's 5G Mobility offers now. Handsets may now run at 1.3-1.5 gig and average up to 2 gigs. Offering speeds that are significantly faster than 4G will encourage customers to upgrade. * 7 Stocks to Buy in December Analysts' average price target for VZ stock is only about $2 above the shares' current price. Despite the conservative expectations analysts have for Verizon, 2020 will be an important year for its 5G growth. 5G Home will continue to expand. As the company rolls out 5G Home customer premise (CP) equipment, it will see a positive contribution to revenue in 2021. Intel Corporation (INTC)Source: Shutterstock Intel Corporation (NASDAQ:INTC) is broadening its business beyond PC central processing unit chips. It believes its network infrastructure business will benefit from the positive future of 5G, so it is investing in networks. Already, this business grew 40% since 2014 from just over $1 billion in revenue to over $4 billion last year. INTC stock is hardly trading like a 5G growth play: The stock is valued at just around 10.8 times earnings.The global rollout of 5G is driving demand for "network cloudification." Intel has opportunity in the core network and at the edge. And Intel's 10 nm Snow Ridge system on a chip technology will power 5G-base stations early next year. Already, the company secured two large telecom equipment manufacturers with this architecture. By 2022, Intel forecasts having a 40% market share.During its second quarter, Intel decided to get out of the 5G smartphone modem business. It sold the unit to Apple (NASDAQ:AAPL). This is a critical turning point for Intel because the chip giant may turn its attention towards 5G networking instead.In the near-term, growth from the cloud business will be slow and in the single digits as customers begin transitioning to 5G. Later this year and in 2020, Intel expects its cloud business to grow at a faster pace. Gross margin will fall slightly and will bottom at 57% in 2021, INTC says. And while an expected gross margin in the 60% range next year is driven by the 10 nm chip refresh, the 5G ramp-up will help its network business.As of this writing, Chris Lau was long NXPI and NOK. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy in December * 7 Unsteady Stocks Investors Should Consider Selling Before 2020 * 7 Entertainment Stocks to Buy to Escape Holiday Blues The post 7 5G Stocks to Buy Now for the Future appeared first on InvestorPlace.
Mon, 25 Nov 2019
22:00:28 +0000
See Who Gets Exposed When You Pull the WeWork Thread
(Bloomberg Opinion) -- In Japan, Masayoshi Son is revered. So much so that banks line up to fund his spending sprees, even though lending to SoftBank Group Corp. is already pushing their limits. But the $9.5 billion bailout package Son has put together for WeWork may have been the last straw. There are already signs of trouble. Part of that rescue was supposed to be a $3 billion tender offer for WeWork stock, which SoftBank is now trying to shrink without much success. Part of the thinking was to limit the payout WeWork founder Adam Neumann gets, as resentment builds among employees who are facing massive job cuts, Bloomberg News reported last week. Yet it’s equally possible that SoftBank is having a tough time with financing. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, is likely to turn down Son’s request for a 300 billion yen ($2.8 billion) loan, the Financial Times reported. This is a major turning point for Son. In recent weeks, investors in Mizuho Financial Group Inc., Son’s go-to lender, started to express concern over the company’s exposure to SoftBank. The megabank is planning to invest in Son’s second Vision Fund, and provide financing for the latest funding round for Oyo Hotels and Homes, another unicorn backed by Son. That money will help Ritesh Agarwal, the 26-year old founder of the Indian hotel chain, buy out earlier investors at an astronomical $10 billion valuation. Investors have good reasons to worry. In its current form, SoftBank is becoming too indebted for Japan’s comfort. The holding company, excluding distressed subsidiaries such as Sprint Corp., had amassed 4.5 trillion yen of interest-bearing net debt, or 12.5% of Japan’s three megabanks’ Tier-1 capital as of September. With 1.4 trillion yen in bank loans outstanding, SoftBank is a big client. Normally, banks wouldn’t want their loan books to be so concentrated; otherwise, one bad borrower can bring down the whole system.As I’ve written, SoftBank is no cash cow. Subsidiaries from Sprint to British chipmaker ARM Holdings Inc. don’t put much on the table, so SoftBank has to live off the cash on hand, borrow even more, or sell its investments. So far, the company has been running like a well-oiled machine. In the September quarter, SoftBank took out a $3.8 billion margin loan backed by its shares in Alibaba Group Holding Ltd. to repay 250 billion yen of bank loans. It also collected $6.4 billion after selling stakes in China’s ride-hailing unicorn Didi Chuxing Inc. to the Vision Fund. As Son’s aura fades, however, he could struggle to form a second Vision Fund, and this important financing channel will disappear.Then there’s WeWork, which takes cash-flow management to a whole new level. The loss-making unicorn has whopping $47 billion lease liabilities looming — and that doesn’t even factor in the $9.5 billion bailout. How SoftBank greases this one through is anyone's guess.Eager to earn fees and net interest margins, Japan’s bankers could look the other way if Son goes for another telecom operator or dabbles in KPMG LLP’s Mayfair private club. At least these deals involve factories, machinery, or real estate, which you can claw back if loans go sour. What kind of collateral can WeWork provide? Pretty decorations from their leased properties?Of course, Son can pretend that, like Sprint or the Vision Fund, WeWork is another “self-financing” entity. He could argue that the 300 billion yen loan is for SoftBank, not WeWork. But bankers are no fools. Once the loans are distributed, they have no control over how they will be spent. In Hindu mythology, there’s a lion whose appetite was so voracious that he ate his legs, torso and everything else up to his lower jaw, so only huge fangs and a gaping mouth remained. WeWork, I’m afraid, may well be SoftBank’s last bite. To contact the author of this story: Shuli Ren at sren38@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Mon, 25 Nov 2019
17:22:32 +0000
FCC's plan to ban Huawei, ZTE could cost rural carriers over $1 billion
The FCC moves ahead with a proposal on removing existing Huawei and ZTE equipment from U.S. wireless network, which could be costly to rural carriers.
Mon, 25 Nov 2019
16:02:25 +0000
UPDATE 3-Texas, Nevada drop out of state AG group suing to block Sprint, T-Mobile merger
Texas' attorney general settled with T-Mobile Inc and Sprint Corp and will drop his opposition to the $26.5 billion merger, leaving just Democratic attorneys general fighting the proposed combination. Texas Attorney General Ken Paxton had been the only Republican among the state attorneys general who had argued that the deal to combine the No. 3 and No. 4 wireless carriers would lead to higher prices and filed a lawsuit to stop it.
Sun, 24 Nov 2019
13:30:00 +0000
Editor's Briefing: Three big leadership changes with a common theme
Changes at the top of Kansas City city government, the Royals and T-Mobile come as the organizations prepare to build on successes.
Fri, 22 Nov 2019
14:31:02 +0000
Sprint (S) Offers Cloud-Based Commercial Phone Service Omni
Omni is likely to enable Sprint (S) to either bundle Omni with other compatible products and services or offer it as a standalone service to medium and small-sized businesses.
Fri, 22 Nov 2019
13:38:00 +0000
AT&T Says Its First 5G Phone Will Be Available for Preorder This Monday
AT&T plans to start taking preorders for the Samsung Galaxy Note+ 5G on Nov. 25. The company also announced 5G service on “low-band spectrum” n a limited number of markets.
Fri, 22 Nov 2019
11:04:00 +0000
Coolest Office Spaces 1st Place: Sprint
The telecom giant captures the top position in this year's competition. Sprint teamed up with WeWork to redesign one of its campus buildings to create "something for everyone."
Thu, 21 Nov 2019
22:48:04 +0000
UPDATE 2-Judge rejects U.S. move to disqualify states' lawyer in T-Mobile/Sprint lawsuit
NEW YORK/WASHINGTON, Nov 21 (Reuters) - A federal judge on Thursday rejected a U.S. government effort to disqualify a lawyer arguing for 15 states and the District of Columbia in their effort to block T-Mobile US Inc's planned $26.5 billion takeover of Sprint Corp. U.S. Magistrate Judge Robert Lehrburger said the Department of Justice waited too long to intervene in the case to try to disqualify Glenn Pomerantz, who had represented the department in 2011 when it stopped AT&T's purchase of T-Mobile, and his law firm Munger, Tolles & Olson. Lehrburger ruled at a hearing in Manhattan federal court, less than three weeks before a scheduled Dec. 9 trial to determine whether T-Mobile, the third-largest U.S. wireless carrier, may go forward with its merger with Sprint, the fourth-largest.
Thu, 21 Nov 2019
21:47:10 +0000
Judge rejects U.S. move to disqualify states' lawyer in T-Mobile/Sprint lawsuit
NEW YORK/WASHINGTON (Reuters) - A federal judge on Thursday rejected a U.S. government effort to disqualify a lawyer arguing for 15 states and the District of Columbia in their effort to block T-Mobile US Inc's <TMUS.O> planned $26.5 billion takeover of Sprint Corp <S.N>. U.S. Magistrate Judge Robert Lehrburger said the Department of Justice waited too long to intervene in the case to try to disqualify Glenn Pomerantz, who had represented the department in 2011 when it stopped AT&T's purchase of T-Mobile, and his law firm Munger, Tolles & Olson. Lehrburger ruled at a hearing in Manhattan federal court, less than three weeks before a scheduled Dec. 9 trial to determine whether T-Mobile, the third-largest U.S. wireless carrier, may go forward with its merger with Sprint, the fourth-largest.



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