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Jack Ma Leaves SoftBank Board as Record Losses Loom Jack Ma Leaves SoftBank Board Amid Record Losses
(about 5 hours later)
SoftBank Group on Monday said that Jack Ma, the co-founder of Chinese e-commerce giant Alibaba, has resigned from its board, an announcement that came as the Japanese company said it was preparing to double the money it has spent on repurchasing its own shares. SoftBank Group on Monday said that Jack Ma, the co-founder of the Chinese e-commerce giant Alibaba, had resigned from its board, an announcement that came just hours before SoftBank announced the largest annual loss in its history and one of the largest ever by a Japanese company.
The dual announcements came just hours before SoftBank was set to announce what is widely expected to be the largest annual loss in company history, driven largely by its investment in WeWork and other technology-related companies that have been hit hard by the coronavirus pandemic. The dismal results were driven largely by SoftBank’s investment in WeWork and other technology-related companies that have been hit hard by the coronavirus pandemic.
In an earnings release, the company recorded an annual operating loss of 1.36 trillion yen, or $12.7 billion, in the fiscal year that ended March 31, its first annual loss in 15 years. It reported a profit of $19.6 billion during the same period last year.
Investors had been bracing for the results. The company had released two earnings warnings, telling markets to expect that its $100 billion Vision Fund — an investment vehicle that became a major finance force in the technology world — would post losses on the order of $16.7 billion.
The company’s losses were slightly higher than its estimates, and the Vision Fund reported a loss of $17.7 billion, greater than predicted. It attributed the blow to the coronavirus’s impact on major companies in its portfolio like Uber, the ride-share company, and WeWork, the tech-related office space company.
With the pandemic in mind, the company joined other major corporations in declining to forecast its earnings for the coming fiscal year, noting that because of the virus “it remains difficult to forecast the medium-term impact on the company’s business and financial results.”
The news came just hours after the announcement of the departure of Mr. Ma, who had served on the board for over a decade.
Masayoshi Son, SoftBank’s chief executive, was an early investor in Alibaba. His $20 million initial stake grew to be valued at more than $100 billion, making it one of the Japanese company’s most valuable holdings.Masayoshi Son, SoftBank’s chief executive, was an early investor in Alibaba. His $20 million initial stake grew to be valued at more than $100 billion, making it one of the Japanese company’s most valuable holdings.
SoftBank has used those assets as collateral to help transform itself from a telecom company into the world’s largest and most powerful tech investor. Through the company’s $100 billion Vision Fund, financed in part with money from sovereign wealth funds in Saudi Arabia and Abu Dhabi, Mr. Son has pumped enormous amounts of capital into cutting-edge and often risky start-ups, companies that he believes have the potential to effectively monopolize entire industries. SoftBank has used those assets as collateral to help transform itself from a telecom company into the world’s largest and most powerful tech investor. Through the Vision Fund, financed in part with money from sovereign wealth funds in Saudi Arabia and Abu Dhabi, Mr. Son has pumped enormous amounts of capital into cutting-edge and often risky start-ups, companies that he believes have the potential to effectively monopolize entire industries.
That vision was challenged last year by the spectacular implosion of WeWork, the tech-adjacent real estate company, over allegations of mismanagement and self-dealing. The coronavirus has threatened to destroy Mr. Son’s dream entirely. It has drained huge amounts of value out of the company’s portfolio of companies, like Uber, the car sharing service, and Oyo, the Indian hospitality company, which have proven particularly susceptible to the pandemic’s effects. That vision was challenged last year by the spectacular implosion of WeWork over allegations of mismanagement and self-dealing.
The coronavirus has threatened to destroy Mr. Son’s dream entirely. It has drained huge amounts of value out of SoftBank’s portfolio of companies, like Uber and Oyo, the Indian hospitality company, which have proven particularly susceptible to the pandemic’s effects.
Unbowed, Mr. Son has doubled down on himself. Last month, SoftBank said it would sell down $41 billion of its assets — perhaps to include part of its Alibaba holdings — to increase its cash reserves and finance an ambitious plan to buy back $23 billion worth of its own shares and shore up its falling stock price.Unbowed, Mr. Son has doubled down on himself. Last month, SoftBank said it would sell down $41 billion of its assets — perhaps to include part of its Alibaba holdings — to increase its cash reserves and finance an ambitious plan to buy back $23 billion worth of its own shares and shore up its falling stock price.
In a separate announcement Monday, SoftBank said it will spend $4.7 billion toward that goal by the end of March 2021, doubling the amount it had already pledged in March. In a separate announcement Monday, SoftBank said it would spend $4.7 billion toward that goal by the end of March 2021, doubling the amount it had already pledged in March.
Shares of the company in Tokyo were up nearly 2.5 percent by midday Monday. Shares of the company in Tokyo were up more than 1 percent during afternoon trading Monday.
The company released two earnings warnings this quarter, preparing investors for losses on the order of $16.7 billion in its Vision Fund investments. The drop in the fund’s value will be partially offset by SoftBank’s other businesses, but the company has predicted it had lost $12.6 billion for the year ended March 31, its first annual loss in 15 years. In its statement, SoftBank did not mention the reason for Mr. Ma’s departure. Last year, Mr. Ma retired as executive chairman of Alibaba, saying that he would pull back from his business endeavors to focus on philanthropy.
In its statement Monday, SoftBank did not mention the reason for Mr. Ma’s departure. Last year, Mr. Ma retired as executive chairman from Alibaba, saying that he would pull back from his business endeavors to focus on philanthropy. Mr. Ma’s departure from SoftBank’s board follows the exit late last year of Tadashi Yanai, the founder and president of the Japanese clothing retailer Uniqlo. Mr. Yanai, a longtime ally of Mr. Son, was seen as a moderating influence on SoftBank’s exuberant founder.
Mr. Ma’s departure from the company’s board follows the exit late last year of Tadashi Yanai, the founder and president of Japanese clothing retailer Uniqlo. Mr. Yanai was a longtime ally of Mr. Son and seen as a moderating influence on SoftBank’s exuberant founder.