Son Steps Away, And SoftBank’s Days of Drama Are Over
(Bloomberg Opinion) -- SoftBank Group Corp. has long stood out for its flamboyant earnings events. As the former telecoms firm morphed into the world’s largest venture capital investor, they’d become must-watch material, a kind of psychedelic version of Warren Buffett’s annual letter to shareholders. Founder Masayoshi Son’s slide decks and comments had it all — golden eggs! Flying unicorns! Comparisons to Jesus Christ! Inexplicable WeWork profit projections!
Even in the bad times, Son would give us a mysterious equation to solve, or a history lesson about an apologetic feudal warlord. By comparison, Friday’s earnings were, frankly, pretty dull.
And they’re going to get duller. Son revealed that he’s going to step away from future events — as well as day-to-day running of the firm itself — to focus on building up Arm Ltd., the chip-design firm it failed to sell to Nvidia Corp. Investors’ only chance to hear from Son will be at the annual shareholders’ meeting in June.
That’s breaking with decades of precedent. Son spoke Friday for a final time for now, giving about 25 minutes on his plans for Arm before handing over to Chief Financial Officer Yoshimitsu Goto. While no slouch, Goto gave a much more traditional numbers-and-graphs briefing than we’ve been used to.
It’s not unusual in Japan for the CFO to give most earnings presentations. Just last week, Sony Group Corp.’s CFO Hiroki Totoki was the one speaking to the media, not Chief Executive Officer Kenichiro Yoshida. But SoftBank has long been anything but the traditional Japanese company: In addition to those slide decks, Son’s forthrightness, willingness to take all questions and combination of self-deprecation and boastfulness (along with the potential for some truly jaw-dropping figures) made the earnings must-see TV.
If that’s coming to an end, then it’s in keeping with how the company wants to operate right now — low-key and out of the spotlight, at least until market conditions are more favorable to its often-questioned investing business model.
“Inflation isn’t going to be controlled any time soon, and it’s going to be tough even for listed firms, much less unlisted ones,” Son said before handing over the reins to Goto. “We have to tighten our defense.”
SoftBank wasn’t kidding when it pledged earlier this year to go into defensive mode, a shift that former banker Goto will take the lead on. As a result, there was little to talk about this quarter — no new buyback announcement, no new asset sales and no significant update on the initial public offering for Arm, which was pushed out beyond the end of the fiscal year ending March.
Son has seemingly become infatuated with the firm he now says he never really wanted to sell, and which he’s proclaimed will be a new engine of growth for the company — and for his “information revolution.” What might end up occupying most of his time is trying to boost the valuation of the IPO to the levels he expects, which won’t be easy in this market.
A far more traditional figure than Son, Goto emphasized safety and stability, played up the firm’s strong cash position and low loan-to-value ratio, and noted that while market conditions would eventually get better, the firm was going to take a conservative approach.
That’s a mood already seen in the plunge in new Vision Fund investment. The firm spent just $300 million in the three months ended September, down 97% from a year earlier. Future quarters are likely to look even more miserly — it’s going to be a bad time to be a startup seeking investment.
Goto emphasized his skepticism over China (“growing more unstable day by day”) and cryptocurrencies (“not part of the Vision Fund’s vision.”) Even the news on FTX.com wasn’t too exciting, with the $100 million investment SoftBank made in Sam Bankman-Fried’s troubled crypto exchange revealed Friday nowhere near the billions that some had outlandishly predicted. SoftBank’s skepticism over crypto is now looking unexpectedly prescient.
Even before today, the firm had already been moving away from its colorful Powerpoint decks, which were starting to attract a little too much unwanted attention. Presentations had become increasingly mundane even under Son, with increasing emphasis on numbers rather than narratives.
Nonetheless, Son’s speech handing over to Goto had something of an end-of-an-era feeling to it. With the founder planning to focus on Arm for now, it even feels a little like this might be the swan song for the “information era venture capitalist” SoftBank. The company has reincarnated itself numerous times over the years, from broadband supplier to mobile phone magnate to investment giant. Perhaps their next incarnation is simply a little boring.
More From Bloomberg Opinion:
- SoftBank’s Shogun Has a Rare Moment of Contrition: Gearoid Reidy
- What to Do When SoftBank Says ‘Not for Us!’: Andrea Felsted
- The Eternal Optimism of Masayoshi Son: Culpan and Reidy
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Gearoid Reidy is a Bloomberg Opinion columnist covering Japan and the Koreas. He previously led the breaking news team in North Asia, and was the Tokyo deputy bureau chief.
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