So Softbank (OTC BB: SFTBF.PK) is threatening to sue a brokerage and The Financial Times over less-than-flattering reports published last week. I've read the Financial Times article in question, and found it run-of-the-mill, if interesting. I can hardly believe that lawsuits, or even the threat thereof, are necessary.

The brokerage, Calyon Capital Market Asia, initially provided a report citing "red flags" in Softbank's accounting. Its concerns specifically regarded Softbank's cash flows and balance sheet, and unconsolidated subsidiaries carrying debt that could ultimately fall on Softbank's shoulders. These are serious and important allegations for investors to consider for any company. That's especially true for Softbank, which has been very active in the acquisition and disposition of businesses over the years.

Let's look at some of the available facts. Capital IQ data shows me that Softbank historically hasn't generated free cash flow until this year. The company does carry a fair amount of leverage on its balance sheet -- for now, I'll avoid the thorny issue of which subsidiaries might not be consolidated -- but at present, its earnings before interest and taxes more than adequately cover its interest expense.

However, it's worth noting that the company recently acquired its mobile phone business from Vodafone (NYSE:VOD). That business is likely providing a great deal of its cash flows, and it's pursuing a very aggressive price strategy against competitors KDDI and NTT DoCoMo (NYSE:DCM). Given all these factors, I'd say there's already reason for caution when considering Softbank as an investment.

Consider also that March 1's 7% fall in Softbank's share price isn't quite so meaningful when you consider that the Nikkei itself was fairly volatile last week. In fact, any even slightly negative news has been kryptonite for stocks all over the world in the past week. Even with the fall that began last week and continues today, Softbank shares remain well above last December's lows. In the grand scheme of things, the stock price movement isn't all that important.

It all makes me wonder whether the folks at Softbank HQ swat flies with frying pans. How is it necessary to sue a newspaper for reporting on a brokerage report? And why even bother suing the brokerage? Softbank could have chosen two far better courses of action. First, it could have talked directly with the analyst at the brokerage, specifically about any concerns without raising a huge fuss. The second (and perhaps easier) solution: Softbank could be more transparent about its unconsolidated subsidiaries. That way, whether or not they are consolidated, investors can make their own best-case or worst-case assumptions.

Instead, Softbank looks awfully defensive. I'm just curious enough at this point to dig up the company's annual report and start perusing the footnotes to see if I can find any additional reasons for skepticism. Somehow, I don't think that's the reaction Softbank wanted from investors when it decided to launch its threats.

Comments? Bring them here.

At the time of publication, Nathan Parmelee owned shares in NTT DoCoMo, but had no financial interest in any of the other companies mentioned. He has once or twice swatted a fly with a frying pan himself, but he was just a teenager at the time. At the time of publication, Nathan was ranked 164th out of 23,877 Motley Fool CAPS investors. Vodafone is a Motley Fool Inside Value selection. The Motley Fool has an ironclad disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.