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SoftBank’s Troubles Deepen With Warning of $16.7 Billion Writedown SoftBank’s Troubles Deepen With Warning of $16.7 Billion Writedown
(about 2 months later)
TOKYO — SoftBank warned investors on Monday that the value of its technology fund may have dropped by as much as $16.7 billion over the last fiscal year, as its investments have been hit hard by the fallout from the coronavirus and by big bets on unprofitable companies like WeWork.TOKYO — SoftBank warned investors on Monday that the value of its technology fund may have dropped by as much as $16.7 billion over the last fiscal year, as its investments have been hit hard by the fallout from the coronavirus and by big bets on unprofitable companies like WeWork.
SoftBank, which had deployed a $100 billion Vision Fund to make huge wagers on young companies like WeWork and Uber over the last few years, said in a statement posted to its website that the fund would record a loss of 1.8 trillion yen for the fiscal year that ended in March “due to the deteriorating market environment.”SoftBank, which had deployed a $100 billion Vision Fund to make huge wagers on young companies like WeWork and Uber over the last few years, said in a statement posted to its website that the fund would record a loss of 1.8 trillion yen for the fiscal year that ended in March “due to the deteriorating market environment.”
While the loss will be partially offset by revenue from SoftBank’s other businesses, the company said it expected to end the year with a ¥1.35 trillion loss, its first annual loss in 15 years.While the loss will be partially offset by revenue from SoftBank’s other businesses, the company said it expected to end the year with a ¥1.35 trillion loss, its first annual loss in 15 years.
The disclosure marked another stumble for SoftBank, which upended the start-up investment world when it began the Vision Fund in 2017 but has lately been struggling. The fund was the largest pool of money ever raised for private technology companies, with backing from sovereign wealth funds in Saudi Arabia and Abu Dhabi, as well as Apple and Foxconn.The disclosure marked another stumble for SoftBank, which upended the start-up investment world when it began the Vision Fund in 2017 but has lately been struggling. The fund was the largest pool of money ever raised for private technology companies, with backing from sovereign wealth funds in Saudi Arabia and Abu Dhabi, as well as Apple and Foxconn.
Through it, SoftBank bet big on start-ups around the world, including Uber, a ride-hailing giant; WeWork, a co-working start-up; Oyo, a hospitality company in India; Coupang, an e-commerce company in South Korea; and Rappi, a delivery company in Latin America. Its aggressive deal-making pushed Silicon Valley investment firms to move faster and raise larger funds to keep up.Through it, SoftBank bet big on start-ups around the world, including Uber, a ride-hailing giant; WeWork, a co-working start-up; Oyo, a hospitality company in India; Coupang, an e-commerce company in South Korea; and Rappi, a delivery company in Latin America. Its aggressive deal-making pushed Silicon Valley investment firms to move faster and raise larger funds to keep up.
But cracks began showing last year when Uber went public at a much lower valuation than expected. In October, WeWork yanked its highly anticipated initial public offering over allegations of mismanagement, and SoftBank pledged almost $10 billion to bail out the company. Both Uber and WeWork grew quickly but are unprofitable.But cracks began showing last year when Uber went public at a much lower valuation than expected. In October, WeWork yanked its highly anticipated initial public offering over allegations of mismanagement, and SoftBank pledged almost $10 billion to bail out the company. Both Uber and WeWork grew quickly but are unprofitable.
In November, Masayoshi Son, SoftBank’s founder and chief executive, said the Vision Fund would not offer bailouts to any more of its investments. Soon after, start-ups around the world shifted their strategies from growing fast to cutting costs and trying to turn a profit.In November, Masayoshi Son, SoftBank’s founder and chief executive, said the Vision Fund would not offer bailouts to any more of its investments. Soon after, start-ups around the world shifted their strategies from growing fast to cutting costs and trying to turn a profit.
This year, several of SoftBank’s portfolio companies laid off staff, scaled back or shut down. They included Brandless, an e-commerce business; Wag, a dog-walking service; Zume, a robot pizza company; and Getaround, a car-sharing company. In March, SoftBank’s bet on the satellite start-up OneWeb went sour when the company announced it had filed for bankruptcy and planned to sell itself.This year, several of SoftBank’s portfolio companies laid off staff, scaled back or shut down. They included Brandless, an e-commerce business; Wag, a dog-walking service; Zume, a robot pizza company; and Getaround, a car-sharing company. In March, SoftBank’s bet on the satellite start-up OneWeb went sour when the company announced it had filed for bankruptcy and planned to sell itself.
The spread of the coronavirus has compounded the struggles, with start-ups across the tech industry having been affected. According to Layoffs.fyi, a site tracking start-up layoffs, more than 200 start-ups have cut nearly 20,000 jobs since March 11.The spread of the coronavirus has compounded the struggles, with start-ups across the tech industry having been affected. According to Layoffs.fyi, a site tracking start-up layoffs, more than 200 start-ups have cut nearly 20,000 jobs since March 11.
Some of SoftBank’s investments, like the food delivery company DoorDash, have found their services in higher demand amid the economic disruptions caused by the pandemic.Some of SoftBank’s investments, like the food delivery company DoorDash, have found their services in higher demand amid the economic disruptions caused by the pandemic.
But SoftBank’s investments in companies that provide services like ride hailing and hotel booking have made it vulnerable. The small-business lender Kabbage and the real estate broker Compass recently laid off and furloughed staff. Widespread shelter-in-place orders have dealt a further blow to WeWork, which has kept many of its co-working locations open amid the outbreak.But SoftBank’s investments in companies that provide services like ride hailing and hotel booking have made it vulnerable. The small-business lender Kabbage and the real estate broker Compass recently laid off and furloughed staff. Widespread shelter-in-place orders have dealt a further blow to WeWork, which has kept many of its co-working locations open amid the outbreak.
Duncan Davidson, a venture capital investor at Bullpen Capital, said SoftBank had driven a bubble in overvalued start-up “unicorns” — private companies valued at $1 billion or more — that burst last year.Duncan Davidson, a venture capital investor at Bullpen Capital, said SoftBank had driven a bubble in overvalued start-up “unicorns” — private companies valued at $1 billion or more — that burst last year.
“It was blowing up anyway, before the virus,” he said. “The virus makes the weaker ones more obviously weak.”“It was blowing up anyway, before the virus,” he said. “The virus makes the weaker ones more obviously weak.”
Kyle Stanford, a venture capital analyst with PitchBook, a service that tracks start-up investments, said many venture capital firms were writing down the values of portfolio companies because of the pandemic, but “no other firm can match the scale of SoftBank” in its writedowns.Kyle Stanford, a venture capital analyst with PitchBook, a service that tracks start-up investments, said many venture capital firms were writing down the values of portfolio companies because of the pandemic, but “no other firm can match the scale of SoftBank” in its writedowns.
Updated June 2, 2020
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
The Vision Fund “will have to choose its best investments to support” through the crisis, he said.The Vision Fund “will have to choose its best investments to support” through the crisis, he said.
In February, Elliott Management, an activist investor, began agitating for change at SoftBank. Public market investors have discounted SoftBank’s stock to a fraction of the value of the firm’s holdings.In February, Elliott Management, an activist investor, began agitating for change at SoftBank. Public market investors have discounted SoftBank’s stock to a fraction of the value of the firm’s holdings.
SoftBank said last month that it would sell down $41 billion of its assets — including a portion of its shares in the Chinese retail company Alibaba, its most successful investment — to shore up its cash position and finance an $18 billion investment in its own shares.SoftBank said last month that it would sell down $41 billion of its assets — including a portion of its shares in the Chinese retail company Alibaba, its most successful investment — to shore up its cash position and finance an $18 billion investment in its own shares.
Even so, Mr. Son has often spoken of a 300-year investment horizon. SoftBank has announced a second Vision Fund, which it has claimed would be even bigger than the first.Even so, Mr. Son has often spoken of a 300-year investment horizon. SoftBank has announced a second Vision Fund, which it has claimed would be even bigger than the first.
In a recent interview with Forbes, Mr. Son said he expected 15 Vision Fund portfolio companies to fail. But his grand vision for the Vision Fund, he said, was “unchanged.”In a recent interview with Forbes, Mr. Son said he expected 15 Vision Fund portfolio companies to fail. But his grand vision for the Vision Fund, he said, was “unchanged.”
Ben Dooley reported from Tokyo, and Erin Griffith from San Francisco.Ben Dooley reported from Tokyo, and Erin Griffith from San Francisco.