Slide 1: Earnings Results for the Second Quarter Ended September 30, 2005
Earnings Results for the Second Quarter Ended September 30, 2005 (2Q/FY2006) November 10, 2005 SOFTBANK CORP.
Slide 2: Highlights
＜Highlights＞ ¾To achieve a consolidated operating surplus after five years’ interval ¾Substantial growth in consolidated EBITDA (on the scale of ¥100 bil. on an annual base) ¾Return from investment totaled to be approx. ¥200 bil. To increase enterprise value 2
Slide 3: 2Q/FY06 Summary of Consolidated Earning Results
2Q/FY06 Summary of Consolidated Earning Results <billions of yen> <Quarter> <Semi-annual> 2H /FY05 2Q/FY06 2Q/FY05 1H /FY06 (Apr-Sep, (Jul – Sep, 2005) (Jul – Sep, 2004) (Apr-Sep, 2005) 2004) Net Sales 264.1 156.3 522.7 303.7 EBITDA 30.7 5.9 50.2 12.0 (EBITDA Margin) 12% 4% 10% 4% Operating Income 7
Slide 4: Consolidated Net Sales (Quarter)
Consolidated Net Sales (Quarter) <billions of yen> 300 264.1 e-Finance segment 258.6 253.8 250 234.2 Consolidated Sales without e-Finance seg 200 2Q /FY06 150 142.9 142.9 123.1 132.8 ¥ 264.1 bil. 109.8 115.0 94.2 93.6 98.2 100 85.5 50 0 *Retroactively adjusted figures 2Q 3Q FY 4Q 2Q 3Q FY 4Q 2Q 3Q F
Slide 5: Consolidated Net Sales (Semi-annual)
Consolidated Net Sales (Semi-annual) 600 <billions of yen> 522.7 e-Finance Seg.(※) 500 488.0 Others 123.6 400 e-Commerce Seg. 130.6 71.2 Internet Culture 300 275.7 58.3 Seg. 168.9 Fixed-line telecom 200 114.2 165.9 Seg. （JAPAN TELECOM ） 43.5 100 BB Infrastructure 109.0 124.9 95.9 Seg. 0 *Retroactive
Slide 6: Consolidated Operating Income (Quarter)
Consolidated 20.0 Operating Income (Quarter) <billions of yen> 10.0 7.5 FY03 FY04 FY05 FY06 2Q /FY06 ¥ 7.5 bil. 1Q 1Q 1Q 1Q 0.0 -2.9 -3.1 -3.8 -10.0 -6.6 -8.8 -7.5 Turned Positive for -10.7 -11.0 the first time since -20.0 -15.1 BB business -20.4 launched -24.1 Otoku-line launched -27.0 -30.0 -33.7
Slide 7: Consolidated Operating Income (Semi-annual)
Consolidated Operating Income (Semi-annual) 30 <billions of yen> 20 11.7 10 4.7 4.4 0 FY01 FY02 FY03 FY04 FY05 FY06 1H /FY06 ¥4.4 bil. 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H -10 -8.7 -6.7 Turned positive -15.1 -20 -15.5 -18.5 for the first time in 4 -30 and half years -31.1 -40 -39.3 YBB launched Otoku-li
Slide 8: Consolidated EBITDA (Semi-annual)
Consolidated EBITDA (Semi-annual) <billions of yen> 50.2 50 40 32.0 30 1H /FY06 ¥ 50.2 bil. 20 16.3 12.0 Significantly increased 8.1 10 1.6 On the scale of Approx. 0 FY01 ¥100bil. on an annual base FY02 FY03 FY04 FY05 FY06 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H -10 -4.5 -7.6 -20 -22.5 -23.6 -30 -40 （EBITD
Slide 9: Consolidated Ordinary Income (Semi-annual)
Consolidated Ordinary Income (Semi-annual) <billions of yen> 20 19.0 10 1.0 0 FY01 FY02 FY03 FY04 FY05 FY06 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H -10 1H /FY06 ¥ (13.4) bil. -16.1 -13.4 -20 -17.1 -18.2 -19.3 Loss decreased -30 -25.9 -40 -50 -45.9 -53.6 -60 -63.8 -70 9
Slide 10: Consolidated Ordinary Income (Quarter)
Consolidated Ordinary Income (Quarter) <billions of yen> 5 1Q /FY06 2Q /FY06 0 -0.4 2Q /FY06 ¥ (0.4) bil. -5 Significant recovery on a quarterly basis -10 -13.0 -15 10
Slide 11: Consolidated Net Income (Quarter)
Consolidated Net Income (Quarter) 10 <billions of yen> 6.9 5 0 FY05 FY06 3Q 4Q 1Q 2Q -5 2Q /FY06 ¥6.9 bil. -10 Turned positive on a -11.1 quarterly basis -15 -20 -25 -26.5 -27.2 -30 11
Slide 12: Transition of Consolidated Earning Results (Semi-annual)
Transition of Consolidated Earning Results (Semi-annual) <billions of yen> Consolidated 40 EBITDA 20 Consolidated 0 Operating Income -20 Consolidated Ordinary Income -40 -60 YBB launched Otoku-line launched -80 FY01 FY02 FY03 FY04 FY05 FY06 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 12
Slide 13: BB Business - ADSL Net Sales & Operating Income
BB Business - ADSL Net Sales & Operating Income (Quarter) <billions of yen> 59.3 60 56.3 52.9 50.4 50 Sales 48.0 44.2 Operating Income 40 39.1 32.9 30 28.4 22.5 20 15.5 9.5 10.7 ADSL Quarterly 10 4.7 6.4 1.9 3.6 Operating Income 0 FY03 Q1 FY04 Q1 FY05 Q1 -3.7 FY06 Q1 Significantly -10 -10.8 -14.3 -1
Slide 14: Key Driver for Achieving Operating Surplus
Key Driver for Archiving Operating Surplus (Quarterly Operating Income by Segment） <billions of yen> 20 1Q/FY03 1Q/FY04 1Q/FY05 1Q/FY06 Internet Culture (Yahoo!Japan) 10 0 -10 -20 -30 -40 14
Slide 15: Key Driver for Achieving Operating Surplus
Key Driver for Archiving Operating Surplus (Quarterly Operating Income by Segment） <billions of yen> 20 1Q/FY03 1Q/FY04 1Q/FY05 1Q/FY06 Internet Culture (Yahoo!Japan) 10 BB Business 0 -10 Fixed-line telecom （JAPAN TELECOM） -20 -30 -40 15
Slide 16: Key Driver for Achieving Operating Surplus
Key Driver for Archiving Operating Surplus (Quarterly Operating Income by Segment） <billions of yen> 20 1Q/FY03 1Q/FY04 1Q/FY05 1Q/FY06 Internet Culture (Yahoo!Japan) 10 Consolidated Operating Income 0 BB Business -10 Fixed-line telecom （JAPAN TELECOM） -20 -30 -40 16
Slide 17: Return on Investment - Sales of Securities
Return on Investment --- Sales of Securities <billions of yen> [First-half] [Second-half] as of Nov 10 Sales Gain on Sales Gain on Shares Shares Proceed Sales Proceed Sales SB IT Fund 41.7 #1 & #2 50.5 9.8 TaoBao 40.6 （$360m） Morningstar, Inc. 9.4 5.9 Yahoo! Advanced Media 9.2 9.1 59.0 UK, Gr, Fr, 5
Slide 18: Bond Redemption Schedule
Bond Redemption Schedule (non-consolidated basis, SB and CB) <billions of yen> 2,200.0 45.1 (Investment in Partnerships) 2,000.0 59.0 (Private Equity Holdings) 1,800.0 Highly liquid source of 1,600.0 redemption 1,400.0 Listed Shares* ¥ 2.0 trillion 1,200.0 1,750.9 Cover Ratio 1,000.0 x 5.7 800.0 Out
Slide 19: Maintaining Sufficient Cash Position
Maintaining Sufficient Cash Position Credit Line Facility to be enlarged due to increase of number of participating banks. New Credit Line Facility ：¥ 160.0 bil. (plan) Increased by + ¥55.0 bil. November, 2005 facility size to be increased by + ¥51.0 bil.（plan） Credit Line (previous) Renewal of prev
Slide 20: Business Overview
Business Overview 1. SOFTBANK’s Aim －3D Growth 2. Infrastructure Business －Enter the Mobile Market 3. Internet Ⅱ- Video Content Era 4. Overseas Development 20
Slide 21: SOFTBANK's Aim
music broadcasting games SOFTBANK’s Aim sports publishing Platform/ portal Infrastructure commerce finance business 21
Slide 22: Revenue Scale Image
Revenue Scale Image Revenue Multi revenue sources from Content Business Increasing returns Portal Business Long-lasting revenue Infrastructure Business Time Present 22
Slide 23: Progress towards a New Stage
Progress towards a New stage - “Planting” to “Harvesting” - Infrastructure to Content Broadcasting Internet 2 Publishing Games Broadband Operating profit Infrastructure 2010 88 trillion※ Sports Music Commerce Time 0 ’xx ’95 ’01 ’05 Burden from up- ADSL business Mobile Market front investment of turn
Slide 24: Content Market = SOFTBANK's Target expands
Content Market = SOFTBANK’s Target expands - With broadband, the Internet has evolved into a more social infrastructure <New broadband-based distribution pattern> Broadcasting Video streaming VOD Publishing Games Internet magazine Online games e-books <old distribution pattern> Commerce Music Movie
Slide 25: Three-Dimensional Growth
Three-Dimensional Growth ① Increase the number of lines ② Enhance Content ③ Expand the platforms through which Content is provided =Unit: from Households to Individuals by entering the mobile business Enhance Content =not limited to Yahoo! BB but to all Broadband Users es fl e r o th in be e m as nu
Slide 26: Infrastructure Business
= SoftBank Infrastructure Business 26
Slide 27: Infrastructure Business - Yahoo! BB
Infrastructure Business - Yahoo! BB ADSL No.1 IP telephony No.1 4.97mil. lines 4.72 mil. lines (as of September 2005) (as of September 2005) ADSL ISP No.1 Wireless LAN No.1 5.38 mil. lines 1.21mil. lines (as of September 2005) (as of September 2005) 27
Slide 28: Infrastructure Business - Otoku Line
Infrastructure Business– Otoku Line （ten thousand lines） 70 Lines connected <for Enterprises> ：680,000 lines 60 -Boost direct sales 50 -Reform sell-to-connect operations 40 <for SMEs> 30 -Enhance agency sales -Started on 2005/10/1 20 10 To be fully expanded 0 starting from Q3 Dec '04 M ar '05 Jun Se
Slide 29: Entering Mobile Market
= SoftBank Entering Mobile Market 29
Slide 30: Mobile Market size (Revenue)
Mobile Market size (Revenue) Mobile Market Vodafone Broadband Market (Fixed) 17.2％ FTTH 14.9％ NTT DoCoMo ADSL KDDI CATV 55.5％ 22.4％ 62.7％ 27.2％ 760 billion yen*1 8.5 trillion yen*3 Over 495 players*2 only 3 players (incl. locals) Market Size 1：11 *1 IT Market Forecasts, “Perspective of the IT market
Slide 31: Mobile Market size (Operating Profit)
Mobile Market size (Operating Profit) Mobile Market Vodafone Broadband Market (Fixed) 12％ ADSL+FTTH+CATV KDDI NTT DoCoMo 22％ 66％ Tens of billions yen*1 1.3 trillion yen*1 Over 495 players*2 only 3 players (incl. locals) *1 Company’s estimate since most (listed or private) companies do not disclose o
Slide 32: Timeline of Frequency band allocation for Mobile Phone Operators
Timeline of Frequency band allocation for Mobile Phone Operators - applying for cellular operating license to enter mobile market present ～1988 1994 2001～2003 2005 aftertime 700/900MHz 1.7GHz 800MHz 1.5GHz 2GHz（ＦＤＤ） 800MHz 2GHz（ＴＤＤ） 2.5GHz Dendenkosha NTTDoCoMo NTTDoCoMo （Currently NTTDoCoMo） 1979 1
Slide 33: Leveraging Existing Customer Base ①
Leveraging Existing Customer Base ① Business expansion based on existing customer base ¾Households to Individuals (1 Household × n users × n services) ¾Utilizing efficient up-front investments (＝SAC for ADSL) (cost of 1/n2) Households to Individuals Multiple Services on the Same Base (existing custo
Slide 34: Leveraging Existing Customer Base ②
Leveraging Existing Customer Base ② Effectively utilize existing customer base of 11 million users Consumer Corporate ※ ※ Voice・Data 9.13 mil. lines Voice・Data 1.58 mil. lines Unit: Unit:from fromHouseholds Householdsto to Unit: Unit:from fromOffice Officeto to Individuals Individuals Employee Emplo
Slide 35: Other Company's Network (Image)
Other Company ’s Network (Image) ROI：low Multiple Networks Lower return on each investment Streaming Content The TheInternet Internet PSTN PSTN IP IPNetwork Network Telephone Telephone AAfew fewhundred IP hundred Nodes Network CDN CDN IP Nodes Network Access Access Network Network Wireless (Provided
Slide 36: SOFTBANK's Network (Image)
SOFTBANK’s Network (Image) ROI：high Single IP Network for Various Services Streaming Content The PSTN TheInternet Internet PSTN SOFTBANK SOFTBANKIP IPBackbone Backbone Over Over6,000 6,000IP-Nodes IP-Nodes One OneNetwork NetworkSystem System Full FullManaged ManagedQoSQoS&&Multicast Multicast 36
Slide 37: Enhancing Wireless LAN Access Points
Enhancing Wireless LAN Access Points One of the Nation’s Largest Wireless LAN provider both for Public and In-house use In-house Wireless LAN “Yahoo! BB Wireless LAN” + Public Wireless LAN “BB Mobile Point” * 1.21 mil. lines approx. 3,200APs （as of the end of Sept. 2005） Wireless LAN Access Points
Slide 38: Expanding Access to Content
Expanding Access to Content Availability of Content is enlarged through Mobile Broadband Fixed Mobile Convergence （FMC） Outside On the move Fixed or Mobile（3G HSDPA） Wi-Fi WiMAX Wireless LAN （Wi-Fi） AT Home At work ～While watching streaming videos～ ～While downloading data～ We can access content anyt
Slide 39: Handover Experiment
Handover Experiment MOBILE W-CDMA (3G HSDPA) & WiMAX & Wi-Fi World’s First Success in Handover (auto-switch) experiments in 1.7 GHz Triple Handover WiMAX 3G HSDPA Wi-Fi Voice/Video/Data Triple Play Realizing a true FMC (Fixed Mobile Convergence) with wireless broadband technology of the next generat
Slide 40: Handover experiment – Radio Site
Handover experiment – Radio Site WiMAX Radio Site （transmitter & receiver） 3G Radio Site Wi-Fi access point 40
Slide 41: Handover experiment Video
Handover experiment Video 41
Slide 42: Internet II - Progress towards the Video Content Era
Internet II - Progress towards the Video Content Era 42
Slide 43: Representative Business Model
Business stage~ Internet I & II For the 2nd Stage of Broadband Content Era: Centered on Video and Voice streaming Internet I ~ Narrowband Internet II ~ Broadband Infrastructure Content Infrastructure Content Representative Business Model ‘96 1st stage ‘01 2nd stage ‘05 3rd stage To provide No Chance
Slide 44: Viewing Style
With the viewing style evolution, Media Content becomes richer. Centered on Video and Voice streaming Radio TV Cable TV Internet 1 Internet 2 Viewing Style Interact Interact Hear Watch Choose In In Still Image Video & Music & Text Birth of Media a New Market 44
Slide 45: Content – Internet Video streaming
Content – Internet Video streaming “TV Bank (provisional name)”: Platform for Video streaming & search - Available to any broadband users - Alliance with top tier providers in Japan and overseas Video On Demand Multi-Channel Video streaming Video Search ※Launched an experimental service from Oct 20,
Slide 46: Content – Internet magazine "Manyo"
Content – Internet magazine “Manyo” ¾Launched “Manyo”; Japan’s first FREE internet magazine ¾Wide variety of ads; double-truck, voice, movie ¾Direct lead to Sponsors’ web pages (special features of the Internet) “Manyo” Approaching 100K users in 2 months after the launch High potential as a powerful
Slide 47: Content~Online Games SOFTBANK Group's Game Business
Content～Online Games SOFTBANK Group’s Game Business Investment・ Publisher 45% Development Overseas 49％ development Media （promotion） 40％ Business alliance Billing 68%(subsidiary) 44％ with other companies gateway Content Delivery Internet cafe platform （Commercial license） *Figures: SB ownership rati
Slide 48: Content~GungHo Online Entertainment, Inc.
Content~GungHo Online Entertainment, Inc. The company plans to acquire a variety of content and to expand channels through business alliances and M&A. ＊SB ownership ratio：45％ Characters and Promotion content Business Business Alliance Alliance Largest Stock Acquisition Stockholders Affiliate No.1 in
Slide 49: Contents~ BB Serve Inc.
Contents~ BB Serve Inc. ＊ SB ownership ratio：49％ SB ownership Established an investment ratio:49％ Knowledge to produce, operate and develop company for the purpose of online games developing online games Knowledge to support venture companies BB Serve’s ownership ratio: 100％ Provide knowledge MOVIDA
Slide 50: Content~ Club iT Corporation
Content~ Club iT Corporation ＊SB ownership ratio：68％ ¾Provide Game-on-demand Service by using the “G-cluster” technology ¾Plan to provide popular game software domestically and internationally TOCA Race Driver2 (Codemasters Software) Biohazard 3 Last Escape (CAPCOM) Knights of The TempleⅡ (Playlogic
Slide 51: Overseas Development
= SoftBank Overseas Development o1
Slide 52: Birth of a Mighty Internet Consortium in China
Birth of a Mighty Internet Consortium in China Establish a valuable position in the Chinese market through cooperation among three companies: Yahoo!, Alibaba.com and Taobao.com Total value of three companies : US $4.0 billion*1 No.1 B2B Company in China Market place Sold SoldTaobao Taobaoshares shar
Slide 53: Birth of a Mighty Internet Consortium in China
Birth of a Mighty Internet Consortium in China Final form of capital structure for Alibaba.com Management and employees of Alibaba.com Approx. 30% share Approx. 40% share Approx. 30% share (Inc.option) B2B C2C Portal, Search •100% owned •Asset subsidiary •Exclusive license of Yahoo’s Chinese Brand “
Slide 54: Alibaba.com
Alibaba.com (Unit: mil.) 10 No. of subscribers 9 Alibaba.com No.1 B2B e-commerce company in China 8 7 Approx. 9 million subscribers from more than 200 countries 6 and regions 5 4 3 2 1 0 May’02 Aug’03 Sept’05 54
Slide 55: Taobao.com
Taobao.com (Unit: mil.) 11 No. of subscribers* 10 Taobao.com 9 No.1 auction company in China Yahoo! JAPAN 8 Over 10 million subscribers 7 6 Became a major auction site, 5 exceeds Yahoo! Japan, 4 in just two years from the beginning of its service 3 2 1 * Figures are at the end of each month • Yahoo!
Slide 56: Taobao.com
Taobao.com (Unit: mil.) 11 No. of items listed on auction No.1 auction company in China 10 Taobao.com 9 Yahoo! JAPAN No.1 company in Asia in terms of No. of listed items 8 7 6 5 4 3 2 1 * Figures are at the end of each month * Yahoo!JAPAN: The number of listed items has not been disclosed from July
Slide 57: Sale of Stakes in Yahoo! Europe and Korea
Sale of Stakes in Yahoo! Europe and Korea Selling interest in 4 companies to Yahoo! Inc, which aims to enforce its international business growth Yahoo! Germany Yahoo! Korea Yahoo! UK To become wholly-owned subsidiaries of Yahoo! Inc. Proceeds：approx. Proceeds：approx.US$ US$500 500mil. mil. Yahoo! Fr
Slide 58: Fukuoka Softbank HAWKS Baseball Club
Fukuoka Softbank HAWKS Baseball Club Delivering Deliveringnumerous numerousnew newservices serviceswith withIT IT New Newwaves wavestotoprofessional professionalbaseball baseballclub cluboperation operation Auction/ Shopping Ke-chan! HAWKS Baseball Broadband TV No. 1 in Regular season Playoff Period
Slide 59: SOFTBANK's Aim
music broadcasting game SOFTBANK’s Aim sports publishing Platform/portal Infrastructure commerce finance business 59
Slide 60: Stock Split
Creating the environment favorable for investment Stock Split Stock Split --- 1：3 Effective date --- January 4, 2006 <before split> <after split> Stock price per share （as of Nov 9） ¥ 7,070 approx. ¥2,356 1 unit approx. ¥700K approx. ¥230K Basically one third ¥7 Dividend per share of the dividend of
Slide 61: Lifestyle Company in 21st century
Lifestyle Company in 21st century Amusement：Video on demand Online games Housework Business ：TV conference Mobile office Hotel/Travel/Airport School Healthcare：Home healthcare In transit Broadband to all living people everywhere 61
Slide 62: SOFTBANK's Fundamental Management Policy
SOFTBANK’s Fundamental Management Policy Endeavoring to benefit society and the economy by fostering the sharing of wisdom and knowledge gained through the IT revolution. 62
Slide 63: http://www.softbank.co.jp
http://www.softbank.co.jp This presentation contains forward-looking statements including statements regarding future events, future strategies or future performance of SOFTBANK CORP. that involves risks or uncertainties. In evaluating these statements, a recipient thereof should specifically consid