SoftBank lost $23.4 billion in the second quarter, and its founder and CEO O Masayoshi Son is facing the biggest Waterloo in his career.
After coming up with a disaster-level second-quarter performance report, the 64-year-old admitted at the performance conference that he should not acquire startups at the peak of the market, and that his portfolio had a lot of problems and mistakes, and promised to cut costs on a large scale to help SoftBank get back on track.
Masayoshi Son said he would consider "all" possible cost-cutting means, including layoffs, and the decision was "unquestionable". He said:
"This is the biggest loss in our company's history, and we attach great importance to it."
"We have to count on cutting the cost of the Vision Fund (to overcome the difficulties). The way to cut costs will have to include layoffs - this is what I have made up my mind to do."
wanted to "home run", but eventually "strike out"
When asked by the media what lessons learned, Son said: "There are too many lessons." He said:
"We are too confident and too ambitious."
"Of course, the market is in a downturn, there is a war, and the new crown epidemic. We can give many reasons, but these are excuses. We must reflect on the fact: If we were more selective and appropriate to invest, we would not have gone this way. "
When mentioning the first Vision Fund, he said that he wanted to have a "home run", but eventually "strike out". As for the second Vision Fund, he adopted a more moderate investment strategy, but the valuation of the company's shares held by the fund was too high and the performance was very bleak.
As a result, the two vision funds of lost a total of 2.91 trillion yen in the second quarter (of which 630 billion yen was attributed to third-party interests).
Specifically, Vision Fund lost 293.4 billion yen on the e-commerce platform Coupang and 220.7 billion yen on the US version of "Hungry" DoorDash. Vision Fund also suffered heavy losses on Norwegian warehousing robot company AutoStore and US co-working space provider WeWork.
It is worth mentioning that SoftBank withdrew from its stake in Uber in the first quarter. In SoftBank's original vision, Uber should have become a star stock in its investment portfolio.
According to Masayoshi Son, in the latest quarter, SoftBank wrote down 284 companies in its portfolio and increased its holdings by only 35 companies. He also said SoftBank is strictly restricting new investments.
In the first quarter, SoftBank's investment division still achieved a profit of 3 trillion yen, including two Vision funds and Latin American funds. And by the second quarter, all these profits basically disappeared.
The financial report released this afternoon showed that SoftBank's net loss in the second quarter was 3.16 trillion yen (US$23.4 billion), setting a record for a loss of 1.7 trillion yen in the previous quarter, and continued to hit a record high.
In addition, SoftBank's foreign exchange losses in the second quarter reached 820 billion yen as the depreciation of the yen pushed up its US dollar-denominated debt value.
"Cutting the Dead" to survive
Faced with the sluggish market, SoftBank can only choose to survive by "Cutting the Dead".
It is reported that SoftBank sold its Alibaba shares through the " forward contract " in the second quarter and raised US$10.5 billion in funds, and raised US$6.8 billion in funds in the same way on July 1.
So far this year, SoftBank has sold its Alibaba shares to more than half, raising a total of 220 00 million US dollars.
Sun also said that he has begun to consider selling shares of Fortress Investment Group . SoftBank acquired Fort Investment for $3.3 billion in 2017, but it was forced to give up its day-to-day control in order to obtain U.S. approval of the deal.
Mitsushige Akino, senior executive of Ichiyoshi Asset Management Co., said:
"They have to sell their assets as much as possible and invest in only high-quality assets." "It's obvious that they are still at risk."
To support SoftBank's share price, Masayoshi Son launched a stock buyback plan of up to 400 billion yen. In November last year, SoftBank said it would buy back SoftBank stocks up to 100 billion yen.
Since the beginning of this year, SoftBank US stock stock price has fallen by 12%, and Japanese stock price has risen by nearly 5%.
The house is leaking and raining all night
In addition to the heavy blow in performance, SoftBank's internal management has also suffered huge challenges.
Chief Operating Officer Marcelo Claure left earlier this year, while former Chief Strategy Officer Katsunori Sago resigned in 2021.
In addition, according to media reports, SoftBank veteran and head of Vision Fund Rajeev Misra is about to go solo and will create his own investment fund , and Masayoshi Son will serve as CEO of SoftBank Vision Fund Phase II.
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