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 had become must-watch material, a kind of psychedelic version of billionaire investor Warren Buffett’s annual letter to shareholders.
Softbank founder Masayoshi Son’s slide decks and comments had it all — golden eggs, flying unicorns, comparisons to Jesus Christ, inexplicable WeWork Inc 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, last week’s earnings event was, frankly, pretty dull.
Photo: AFP
And they are to get duller. Son revealed that he is 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 Softbank failed to sell to Nvidia Corp.
Investors’ only chance to hear from Son will be at the annual shareholders’ meeting in June.
That is breaking with decades of precedent. Son spoke last week for a final time for now, giving about 25 minutes on his plans for Arm before handing over to Softbank chief financial officer (CFO) Yoshimitsu Goto. While no slouch, Goto gave a much more traditional numbers-and-graphs briefing.
Photo: REUTERS
It is not unusual in Japan for a CFO to give most earnings presentations.
Last month, Sony Group Corp CFO Hiroki Totoki was the one speaking to the media, not Sony CEO Kenichiro Yoshida.
However, Softbank has long been anything but the traditional Japanese company: In addition to those slide decks, Son’s forthrightness and 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 is coming to an end, then it is 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 investment 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 was not kidding when it earlier this year pledged to go into defensive mode, a shift that former banker Goto would 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 (IPO) 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 has proclaimed would 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 would not 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 to take a conservative approach.
That is a mood already seen in the plunge in new Vision Fund investment. The firm spent just US$300 million in the three months ended September, down 97 percent from a year earlier.
Future quarters are likely to look even more miserly — it is a bad time to be a start-up seeking investment.
Goto emphasized his skepticism over China, saying it is “growing more unstable day by day,” and cryptocurrencies, which he said are “not part of the Vision Fund’s vision.”
Son’s speech 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.
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.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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