Softbank records record losses, announces layoffs, and the CEO apologizes

Softbank records record losses, announces layoffs, and the CEO apologizes

SoftBank’s time is up. The Japanese conglomerate, which has invested in companies such as Uber, Rappi, Nubank and Inter, posted a record net loss of 3.16 trillion yen, or about $23 billion, in the quarter ended June 30.

The negative result came with an apology from group CEO Masayoshi Son, and just over a year after SoftBank shocked its critics by making the biggest profit in its history.

“When we made a big profit, I was almost ‘delusional’ and now, looking back, I’m embarrassed, but I can say I learned lessons,” says Son, while presenting the company’s results, which were streamed online with simultaneous translation into English.

In making a mistake, he gave the son first slidingthe famous image of Tokugawa Ieyasu, the Japanese shogun – the title of military leadership used in feudal Japan – after a humiliating defeat occurred because the military man, despite all advice to stay in the castle, preferred to engage in battle against an enemy much stronger.

Photo of Tokugawa Ieyasu (Source: Reproduction / Softbank)

The painting shows a face contorted by pain and remorse and, according to tradition, would have reminded of the defeat caused by arrogance. “That’s what I’m doing now as well,” Son announced, presenting the group’s results.

The CEO’s stance on the result he considers “shameful” is very different from that given in May 2020, when Son made a headline in the Financial Times when he compared himself to Jesus Christ for being misunderstood, too.

Since the founding of SoftBank, Son has incurred consecutive quarterly losses. “I need to remember and remember that,” he supposes, also referring to the result of the first quarter of 2022, which caused a loss of $16 billion.

Changes on the horizon

The group has since announced three changes to its policy. First, it changed its investment stance and became more defensive and selective in its investments. Some say it’s time to buy rather than sell. I can agree, but my face looks like a picture of Tokugawa Ieyasu. We have a vision and it remains the same, but if we pursue that vision at any cost, we may end up losing a lot. This is something we want to avoid.

In addition to the change in investment policy, the company also announced a reduction in operating costs – also known as layoffs. “Our source is smaller, so we will need to reduce the number of teams significantly,” said Son, who did not give the exact numbers. The process is still being discussed internally but there is no “holy area”: ​​employees of all levels of all sectors in which country they operate will be affected, said Son. where the company.

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The third measure taken was to limit new investments and shift their focus to supporting the 473 companies already part of the SoftBank portfolio. “We need to increase the value of our existing portfolio,” he said.

How will this be? To this question, there is still no answer. What Sun only said is that the “winter” period will continue, and it is not known whether it will be for three months or three years. With inflation increasing and continuing around the world, central banks will have to raise interest rates. “Furthermore, the epidemic is not over yet and we still have to worry about the tension between Taiwan and China,” he enumerated. Looking at this scenario and these market conditions, Son explained that from the investors’ point of view, it should be said that we are in the winter.

He added that listed and unlisted companies will face the crisis in different ways. The value of the listed companies is reviewed every day. Those who are not listed are still with evaluation High and its founders are not ready to accept re-pricing,” he said. “This winter, for unlisted companies, it should be bigger,” he said.

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