SoftBank Takes Another Multibillion-Dollar Hit From Bad Bets


TOKYO — SoftBank Group has taken one other multibillion-dollar hit from its bold however expensive bets on as soon as high-flying firms like Uber and WeWork, placing rising stress on the Japanese conglomerate to get its monetary home so as.

The firm and its founder and chief, Masayoshi Son, have dominated the world of expertise funding via the $100 billion Vision Fund. More lately, the corporate has turn into a goal for the hedge-fund large Elliott Management, which has been urging modifications on the Japanese agency, together with governance overhauls and inventory buybacks.

On Wednesday, SoftBank could have given Elliott another excuse to complain. It stated the Vision Fund and different investments value its backside line 225.1 billion yen, or about $2 billion, within the ultimate three months of 2019.

Overall, SoftBank reported a revenue of about $501 million for the quarter, nicely wanting what buyers had anticipated. Its revenue was lower than one-tenth of what it had posted one 12 months earlier. Its working revenue fell 99 p.c.

In a presentation to buyers and analysts on Wednesday, Mr. Son prompt that he would sluggish the Vision Fund’s torrential tempo of fund-raising and investing.

Asked in regards to the standing of elevating cash for a deliberate $108 billion second iteration of the Vision Fund, Mr. Son stated that SoftBank’s latest challenges had “caused concerns among potential investors,” including that he had “received a lot of feedback from people, and we are actively engaging in discussions.”

Mr. Son stated that SoftBank would proceed making new investments. “Once potential partners are more comfortable,” he added, “they will join us.”

Despite the massive losses, Mr. Son didn’t seem chastened. Instead, he performed down considerations about SoftBank’s future, dismissing worries about its monumental company money owed and its underperforming investments in a variety of quixotic tech companies.

Focusing on the optimistic, he cited SoftBank’s victory within the United States this week associated to Sprint, the American wi-fi service that the corporate has spent closely to help. On Tuesday, a choose approved a merger between Sprint and T-Mobile, another American wireless carrier, to form a more powerful competitor to rivals like AT&T and Verizon.

The deal is one of the few bright spots in what has been a tough year for SoftBank. Last February, the company was riding high. WeWork and Uber, two companies in which it had invested heavily, planned to sell shares to the public, raising hopes of high valuations and big returns.

Since then, SoftBank has weathered a number of setbacks. The most spectacular was the cancellation of WeWork’s initial public offering after the revelation of serious governance issues, including allegations of self-dealing by the company’s chief executive at the time. In November, SoftBank said it had lost $4.6 billion on its investment in WeWork.

Additional stumbles have compounded the losses. Uber’s I.P.O. was disappointing. Other investments have also soured; its stake in the dog-walking start-up Wag was sold at a loss.

Mr. Son has often urged investors to ignore short-term fluctuations in the values of the company’s investments, saying that he is making long-term bets that he believes will fundamentally change major industries like transportation and real estate.

During his presentation Wednesday, Mr. Son showed a slide that from one angle appeared to be a duck, but seen from a different one looked like a rabbit. The picture, he said, was a metaphor for how some analysts were taking the wrong perspective on the company.

“The market view is still skeptical of us, that SoftBank might go bankrupt,” he said. “But that tide is turning.”

At another point, he asked members of the audience to raise their hands if they knew how much Uber’s share price had increased since SoftBank’s investment, and then scolded them when only a few responded.

Mr. Son is used to being the one who makes big investments in companies and then calls the shots. But as the company’s troubles pile up, that dynamic may be shifting.

Elliott Management, the $40.2 billion hedge fund run by Paul E. Singer, emerged last week as a major SoftBank investor after buying a $2.5 billion stake. Elliott is looking at ways to lift SoftBank’s shares through moves like stock buybacks, changes to SoftBank’s board or increased transparency for the Vision Fund.

Addressing questions about Elliott’s plans for SoftBank, Mr. Son said he had met with representatives from the hedge fund and had a “good discussion.”

“In principle, we would like to have a buyback,” he said, without committing to the idea.

“All shareholders want their investment to grow, whether silent shareholders or noisy shareholders,” he said, adding “we are all in the same boat.”



Source link Nytimes.com

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