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SoftBank in Crisis Amid Record Losses

TOKYO — His flagship tech fund is losing money. His company just posted billions in losses. And a key ally, the Chinese technology mogul Jack Ma, stepped aside.

Still, Masayoshi Son, the exuberant chief executive of the Japanese conglomerate SoftBank, mustered another spirited defense of his troubled empire on Monday, shifting from contrite to brash and back again in a performance that sought to both reassure investors and restore his own bruised reputation.

Mr. Son’s earnings presentation came just hours after the company announced that Mr. Ma, the co-founder of the Chinese e-commerce giant Alibaba, had resigned from its board. That news was quickly followed by an earnings report describing losses that were the largest on record not just for SoftBank, but for any listed Japanese company ever, according to NHK, the public broadcaster.

The company reported 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. The company had a net income loss of $894 million.

The dismal results were driven largely by SoftBank’s investment in WeWork, the office space company, and Uber, as well as poor showings by other technology-related companies that have been hit hard by the coronavirus pandemic.

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.

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.”

During his presentation, Mr. Son refused to be drawn out about Mr. Ma’s departure, saying that it was a decision Mr. Ma had made on his own and that the two men “will remain friends for the rest of our lives.” Last year, Mr. Ma retired as executive chairman of Alibaba, saying that he would pull back from his business endeavors to focus on philanthropy.

Mr. Son was an early investor in Alibaba. His $20 million initial stake grew to be valued at more than $100 billion, making it one of SoftBank’s most valuable holdings.

The company has used those assets as collateral to help transform itself from a telecom firm 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 over allegations of mismanagement and self-dealing.

The coronavirus has threatened to destroy Mr. Son’s dream. It has drained huge amounts of value from 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 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 that it would spend $4.7 billion toward that goal by the end of March 2021, doubling the amount it had already pledged in March of this year.

The money to finance it, Mr. Son confirmed during his presentation, came in part from sales of the company’s position in Alibaba.

Shares of SoftBank in Tokyo closed up more than 1 percent Monday.

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.

In a presentation that started with a funereal tone and ended with a breath of fire, Mr. Son defended the company’s performance, switching between playing up and playing down the threat of the pandemic to the Vision Fund’s investment portfolio.

Speaking to what appeared to be an empty room, he presented a PowerPoint deck that began with a history lesson about the Great Depression before going on to quote statistics about the impact of the coronavirus on the global economy — data on everything from the drop in restaurant sales to the rise in layoffs.

One slide showed a herd of unicorns — a nickname for companies valued at a billion dollars or more — running up a hill and plunging into a pit labeled “Valley of the Coronavirus.” One of them sprouted wings, an image that Mr. Son said represented how some of the Vision Fund’s investments, particularly those in the medical sector, would “lead the rebound,” adding that “some of our unicorns will fly.”

Returning to the subject of the Great Depression, he asked investors to consider how that calamity had transformed the economic landscape, allowing new technologies to flourish.

“This shock from the corona outbreak will accelerate the paradigm shift toward a new era,” he said, adding that the Vision Fund’s investments were well positioned to take advantage of fundamental transformations in people’s lives, such as moving work and medicine online. “We look forward to navigating the challenges,” he said.

Still, some of his unicorns had fallen farther than others, Mr. Son admitted. Of the 88 companies in the Vision Fund, 47 were losing money at the end of March, and the portfolio was now worth about 1 percent less than the sum of money it had invested.

The situation, he admitted, was “not that great,” adding that it had led the company to stop seeking outside investment for a second and even larger iteration of the fund, known as Vision Fund II, announced last summer.

The humility was short-lived, however. As reporters peppered Mr. Son with questions about the first Vision Fund’s valuation, his characteristic fire returned.

Asked if he considered his investments a failure, Mr. Son pushed back: “I’d say it’s not too bad, considering the very poor market climate.”

The coronavirus crash was tough, he said, but he had seen worse.

After the tech bubble burst in the late 1990s, he added, it was as though he was hanging from a cliff “with two fingers.” This time, he concluded, “compared to the past crisis, I’m just looking down at the bottom of the valley from above.”

As the presentation closed, however, he admitted there was still a long way to fall.

“Things will probably get worse,” he said, “but we will keep working hard to survive.”

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Jack Ma Leaves SoftBank Board as Record Losses Loom

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.

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.

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.

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.

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.

Shares of the company in Tokyo were up nearly 2.5 percent by midday 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 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 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.

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