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Softbank Continues Yahoo! Purge

Softbank, one of Japan's largest broadband investors, started its latest Yahoo! purge Thursday, selling 30 million shares in private and open market deals.

More than a third were picked up by Yahoo! itself, for a cool $100 million.

The sale comes almost two weeks after Softbank subsidiary Nasdaq Japan was shut down. With an equity stake of 43 percent, officials said they would lose all of its roughly $10 million investment in the company.

The investment firm, which specializes in broadband Internet companies, has been shedding stock like crazy the past year to continue funding its digital subscriber line (DSL) service using Yahoo! BB, the leading competitor to Japan's incumbent Nippon Telephone & Telegraph .

Ron Fisher, Softbank Holdings, Inc., vice chairman, said the move was consistent with its plans to diversify funds in other areas and "our need to fund our broadband operations in Japan."

Both providers have been waging an all-out price war to become the dominant DSL provider in the nation, much to the joy of Japanese technophiles and the chagrin of its shareholders. With a price/speed package that would have any American broadband user drooling, the two offer DSL under $20 U.S. for 1.5 Mbps download speeds and $23 for up to 8 Mbps.

NTT, the incumbent telephone company in Japan, has been able to buffer its broadband losses with its varied revenue sources (similar to the U.S., with voice and business T-1 service). Yahoo! BB, on the other hand, doesn't have that luxury, so is forced to look elsewhere for money.

This is Softbank's third sale of Yahoo! common shares, bringing its investment stake in the company to seven percent. In the heyday of its Yahoo! involvement, 1996, Softbank owned 37 percent of the popular portal company.

But in the past year or so, the sale of Yahoo! stock has become a habit. In December 2001, Softbank sold off three percent of its Yahoo! stake shortly after the portal company started dealing with SBC Communications . Then, in April, Softbank garnered another $171 million from the sale of 2.7 percent of its shares to Yahoo!

Thursday was no different, and Yahoo! executives couldn't be happier. Surviving relatively unscathed from the dot com collapse, Yahoo!'s DSL marriage with SBC will likely bear fruit next year and its board of directors have been steadily buying back shares every time Softbank puts them on the block.

Susan Deckeer, Yahoo! chief financial officer, said the buyback of 11,074,197 shares is part of its long-range strategy to enhance shareholder value.

"This transaction demonstrates Yahoo!'s belief that we are well-positioned to deliver long-term growth and profitability," she said.