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Masayoshi Son has clearly learned a lot from Adam Neumann.
During Monday’s earnings presentation, Son announced that SoftBank was valuing the struggling WeWork at $2.9B. Juuuust short of the $47B it was privately valued at last year before the bungled IPO.
At least Masa Son is self-aware, on the call he referred to his faith in WeWork “foolish,” which is the nicest way to say “I just whiffed on $44B in market value.” WeWork’s Chairman Marcelo Claure said Son is still a “huge believer” in the business, so I guess Marcelo must have missed the call.
After a hot start, SoftBank’s Vision Fund has become a massive failure. Over the last fiscal year, the fund’s investments are down $17.7B, the worst loss in parent-company SoftBank’s 39-year history. Ahhhh, just missed it.
As a result, the Prodigal Son said that he believes the first Vision Fund will also be the last, as he won’t be asking outside investors to fund his bad ideas anymore. The return on the Vision Fund this year has been -6%, compared to 62% a year ago. The quintessential example that past performances do not guarantee future results.
And for that reason, I’m out
As if hemorrhaging value wasn’t enough, now SoftBank has to fill an empty board seat. Alibaba’s Jack Ma, who’s been with the company’s board for almost 14 years, announced he’s resigning. While Ma didn’t give a reason for his resignation, I can think of about 17.7B reasons that might have tried his patience.
Or it could have been that Masa likened himself to a certain carpenter from Jerusalem during the call. That’s right “Jesus Christ was also misunderstood,” according to Softbank’s CEO. Sounds like he is taking “Son” of God a little too literally.
The bottom line…
SoftBank was already preparing to dump $14B in Alibaba stock.. Son and Sons are also exploring the sale of part of Sprint. Son’s SoftBank’s began shopping its stake in the wireless provider after its merger with TMobile. I wouldn’t want John Legere’s scraps either. With the looming economic downturn, SoftBank was also looking to raise cash to push through the end of coronavirus.
The issue might extend beyond Softbank as we could be seeing the end of the globalized tech giants. Between the US and China’s trade war, and China and Japan’s “trade war” (Japan said it wants to be less reliant on China for manufacturing) it sounds like big tech might be reeling itself in. Somebody’s been listening to Donnie Deals’ State of the Union addresses.
Oh, and TSMC, the world’s largest chipmaker, said it was building a plant in Arizona, and denying orders from Huawei. Yeah, they were definitely listening to DJT.
Water Cooler Talking Point(s)
💧 “If I lost $17B for my company and didn’t lose my job, I definitely wouldn’t be comparing myself to Jesus, that’s for sure.” (AJ, The Water Coolest HQ)
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