SoftBank Sees EBay, Amazon Sales as Guide to Alibaba Value

May 29, 2014 2:13 am ET

(Updates with closing share price in eighth paragraph.)

May 29 (Bloomberg) -- Alibaba Group Holding Ltd., which is preparing for a U.S. initial public offering, is a great business with impressive metrics, said Masayoshi Son, whose company SoftBank Corp. owns 34 percent of the Web marketplace.

The Chinese online retailer brings in more profit than U.S. rivals Amazon.com Inc. and EBay Inc. combined, Son said yesterday at the Code Conference in Rancho Palos Verdes, California.

“Both are great companies -- if you just look at the past year, the value of the e-commerce transactions over their platforms, Amazon and EBay added together, Alibaba did more,” Son said. Combining Amazon and EBay would result in a market value of about $200 billion, he said.

“You put the price tag on Alibaba yourself,” Son said.

Alibaba’s market value is estimated at $168 billion, bigger than 95 percent of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. At that valuation, SoftBank’s stake in the company is worth about $58 billion, assuming those shares translate into the same-sized holding in the listed company and there are no conditions on their ownership.

Son was speaking during Alibaba’s quiet period, when company executives usually restrict their statements to details already included in regulatory filings. Factual business information can still be disclosed, according to the U.S. Securities and Exchange Commission. The Japanese billionaire said he was aware of the quiet period and that he had to be careful with his remarks.

Christina D’Amico, a spokeswoman for the SEC, declined to comment.

Son’s Investments

SoftBank rose 0.6 percent to close at 7,234 yen in Tokyo trading, paring a 21 percent loss this year. The benchmark Topix index added 0.2 percent today.

In 2000, SoftBank started with a $20 million investment in Alibaba and the Japanese company now has a 34 percent stake in China’s biggest Internet shopping mall.

Son, who led SoftBank’s $22 billion acquisition of Sprint Corp. last year, said yesterday that he’s seeking more scale for the U.S. business as telecommunications companies consolidate. The purchase of Sprint gave Son access to about 50 million subscribers in the U.S, which he has described as an “oligopoly” market. The company plans to upgrade its U.S. network, and Son has made no secret of his interest in acquiring T-Mobile US Inc. in an effort to challenge market leaders Verizon Communications Inc. and AT&T Inc.

Son has transformed SoftBank, founded in Tokyo in 1981 as a wholesaler of packaged computer software, into a full-fledged telecommunications operator via acquisitions, including that of the Japanese unit of Vodafone Group Plc in 2006. SoftBank has invested in more than 1,300 companies.

Son’s investments also include Yahoo Japan Corp., the nation’s biggest Web portal, Zynga Inc., creator of smartphone gaming hits FarmVille and Mafia Wars; and GungHo Online Entertainment Inc., maker of the Puzzle & Dragons game.

--With assistance from Alan Katz in Washington.