In the coming years, Softbank may face problems because of the changing Internet and c-commerce indusliy (see Exhibit C5-7.. Some of the problems include:
1. Unlike Microsoft, Dell, AOL, Amazon.com, and other high-tech companies, Softbank is not a household name in the U.S. and the
Western world. The company is very well
known in Japan but carries limited influence in other markets.
2. Softbank mostly stayed in Japan and sought
its growth through acquisitions. These acquisitions have accumulated debt, which may limit future growth if some of its entities go sour.
3. Ziff-Davis, Inc., which publishes PC Magazine and Computer Shopper faces problems because of its declining ad revenues, heightened competition, and debt problems. Analysts believe that Ziff-Davis-may take some time to recover since the world PC industry now faces lower profits and an invasion of cheaper machines (Advertising Age, 1998; Busines Week, 1999a;
4. Softbank is not listed on the New York Stock Exchange or NASDAQ.This weakens Soft- bank's abihty to attract mutual fund managers and institutional investors from the U.S. In addition, this may hamper Softbank's future growth in Japan, the U.S., and Western Europe.
5. The East Asian crisis has affected Softbank's expansion in the Asian markets. Although economic conditions are improving, Softbank may be affected because of currency depreciations in the weaker economies; i.e., Indonesia, Thailand, Malaysia, and others.
6. Historically, Softbank has targeted the distribution of software, computer publications, and selected consumer c-commerce areas. It is still a small player in the c-commerce industry because of entry barriers and heightened competition.
7. Softbank plans to enter into Japan's online financial and insurance industry, which is somewhat untapped. Some analysts believe that Softbank may face tough competition because of its unfamiliarity with these sectors. Softbank's strong know-how in the Internet areas may not be replicated in the finance and insurance sectors.
8. The Internet and e-commerce industry at the global level is a complex industry because of regulations and country-specific standards. Softbank may face these hurdles beyond the Japanese market.
9. Since 1996, Softhank's stock has plunged many times because of its massive acquisitions and debt problems. Some analysts are concerned about Softbank's handling of its debt and negative cash flows because Son owns 43 percent of the company (Fortune, 1997..
10. In the U.S. market, Softbank has devised a new strategy to cope with its new competitors. Some of the smaller companies in the ecommerce industry are perceived to be more successful and profitable.
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