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UPDATE 1-SoftBank eyes sales surge after Sprint, handset deals

Thu, 31st Oct 2013 15:13

* Softbank targets 7 trln yen in sales next year

* Profit up despite drag from recently acquired Sprint

* CEO Son says handset supplier to bolster mobile business

By Nobuhiro Kubo

TOKYO, Oct 31 (Reuters) - Japan's SoftBank Corp aims to boost its sales past the 7 trillion yen ($71 billion)milestone next year, putting it in the same league aselectronics giants like Sony Corp by leveragingacquisitions to boost its mobile business.

While the tech giant suffered a profit drag from anoperating loss at U.S. mobile operator Sprint Corp, itreported record six-month operating profit of 715.1 billion yenon Thursday - a rise of more than 60 percent and on track tomeet billionaire founder Masayoshi Son's target of 1 trillionyen in the year to next March.

Son acknowledged that it would take time, however, toachieve a turnaround at Sprint, the No. 3 U.S. mobile carrierwhich it acquired this summer for $21.6 billion.

"In one year, we will improve the network. I think it willtake one year, but after one year, I think it will be a completetransformation," he told a news briefing.

Bolstering his confidence was the recent, $1.26 billionacquisition of handset distributor Brightstar, which Son saidwould serve as a "weapon" for his expanded mobile empire.

SoftBank's bulk-up, he said, would give it the buying powerto negotiate down procurement costs. TheSoftBank-Sprint-Brightstar combination buys in two or threetimes as many handsets as AT&T Inc or Verizon Wireless, five to six times those of NTT DoCoMo and 10times those of KDDI Corp, its Japanese rival, he said.

HANDSETS AS WEAPONS

Son illustrated the strategy by recalling how an exclusiveiPhone supply deal with Apple Inc helped him to make asuccess of his deal to buy out Vodafone Group Plc's Japanese unit in 2006, transforming SoftBank from a broadbandInternet service provider into one of Japan's largest mobilephone operators.

"Just before buying Vodafone Japan, I went to Steve Jobs andasked him to let SoftBank have exclusive sales of the iPhone inJapan ... before he announced the iPhone," Son told a newsconference after Thursday's earnings announcement.

"I got a verbal agreement from him, so I put down nearly 2trillion yen and made a bet on the Vodafone Japan acquisition.I'm not so stupid that I would go into battle without anystrategy or weapons."

SoftBank also announced this month a $1.5 billion purchaseof Finnish mobile game maker Supercell, whose titles include"Hay Day" and "Clash of Clans", expanding on the offerings ofits GungHo Online Entertainment unit which contributedstrongly to first-half profits.

SoftBank has forecast its sales this financial year willbreach the 6 trillion yen mark, while the targeted break above 7trillion yen next year would put it around the same level asSony, which has forecast sales this year of 7.7 trillion yen,and Panasonic Corp, which is projecting 7.4 trillionyen.

SoftBank is already Japan's most valuable technology companyby market capitalisation and its shares have more than doubledsince the start of the year, outpacing a nearly 40 percent rallyin Japan's benchmark Nikkei average as investors aredrawn to Son's aggressive strategy.

In the mobile phone sector, SoftBank for the first time beatdomestic mobile phone rivals DoCoMo and KDDI in sales, netprofit and operating profit with its first-half results,although it still lags in subscriber numbers.

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