Is more trouble waiting for SoftBank in this year?
By MYBRANDBOOK
It has reportedly been found out that Jack Ma who was a crucial board member of the SoftBank Group is about to step down from his position. Though Jack Ma has cited his increasing focus on philanthropic causes for his resignation, SoftBank Group moving forward without him will surely have to deal with a lot more turbulence now.
Jack Ma’s departure closely follows the resignation of Masayoshi Son’s another very trusted confidant Tadashi Yanai, founder and CEO of Uniqlo. He resigned from the SoftBank board after 18 years late last year to focus on his fashion business.
SoftBank began with a real rocky start this year wherein they first got sued by WeWork, the US office-sharing giant, for the breach of contract by backing out of a $3 billion rescue plan.
The company in the previous month of April, reported that they are going to be facing humongous losses for the financial year ended March 2020 which is also known as fiscal 2019. SoftBank Group is all set to incur a loss of $12.5 billion along with their Vision Fund incurring an even bigger loss of $16.5 billion. Masayoshi Son who is the CEO of the company, in a statement, said that this is the company’s first annual loss in 15 years.
It should also be noted that the sudden outbreak of the coronavirus pandemic which became the cause of the global economic downturn also contributed very heavily to SoftBank’s misfortunes. SoftBank invested close to $1.5 billion, last month had to furlough many of their employees both in India as well as in foreign countries to survive the virus. Japan, which is SoftBank’s home country, also fell into recession because of the pandemic.
The future of Vision Fund 2 is very bleak as well. Investors, who participated in the Vision Funds, are reportedly not at all pleased with how the first Vision Fund portfolio companies have been performing. In fact just to portray a viable and optimistic picture of the first Vision Fund, SoftBank Group had to infuse its own $2.5 billion worth of funds into new investments since October 2019.
Masayoshi Son mentioned that a second $4.7 billion tranche of share purchases, which is part of the March announced $41 billion buyback programme, has been approved by the board. Along with this, at the end of April, the company has also bought back more than 250 billion yen of its shares.
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