Japanese banking giant SoftBank Group said on Monday (Feb. 15) that, in an effort to help shore up its stock price — battered like so many telecom and tech peers but, in this case, due in part to its struggling mobile business, Sprint — it would buy back roughly $4.4 billion in stock.
That would amount to about 14 percent of the firm’s market cap, estimated The Wall Street Journal. That amount would also be the biggest buyback by the company. As is standard practice among publicly traded firms, difficult earnings reports tend to have concurrent or subsequent announcements of buybacks, with the mindset — explicit or implicit — that the stock remains undervalued. In addition, the firm said that things are beginning to turnaround at Sprint, with at least some net growth in subscriber counts after buying the firm for $22 billion three years ago. There have been longstanding concerns that the unit’s $32 billion in debt might be problematic for the firm at large. In a vote of confidence in Sprint, SoftBank has started a phone leasing company. Sprint currently has a fourth place finish in terms of global market share. SoftBank has also seen its shares sink along with the waning fortunes of Alibaba, where it maintains a 32 percent stake in the eCommerce play.
In tandem with punishment in global equities markets, SoftBank shares have lost a third of their value from levels seen a year ago. In the latest results, operating profit outpaced revenue growth at respective rates of 7 percent and 4 percent.
The buyback will take place over a year and will begin this week. But it needs to be funded by as yet undisclosed and undecided asset sales. The latest announcement follows an August buyback that topped $1 billion.