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SoftBank May Turn Profit After $48 Billion in Vision Fund Losses

After five quarters of revenue losses, SoftBank Group Corporation’s Vision Fund is set to earn a profit owing to a recovery driven by artificial intelligence which is increasing startup market valuations.

After suffering losses of 6.9 trillion dollars approximately $48 billion over the previous two years of operation at the Vision Fund investment subsidiary, the Japanese behemoth is battling to restore its foundation.

Based on the average of expert expectations, analysts anticipate a minor gain at the investment company for the three months ending in June, whereas SoftBank is expected to disclose a profit of about 73 billion dollars on Tuesday.The IPO (Initial Public Offering) of Arm Ltd. will determine if SoftBank owner Masayoshi Son can embark on the attack and look for new possibilities in business.

In a marketplace launch as early as September, his chip creator hopes to make a profit of a maximum of ten billion dollars at an estimated valuation of 60 to 70 billion dollars. If Arm were successful in achieving its fundraising goal, it would surpass Meta Platforms Inc. as well as Alibaba Group Holding Limited as the biggest technology debut ever.

The values of Arm’s competitors have increased as a result of their obsession with artificial intelligence. The valuation of NVIDIA Corporation has surpassed a trillion dollars this year, and the Nasdaq 100, a barometer for technology firms, had its greatest January-June result ever.

Also Read: Crypto stocks dip after bitcoin slumps to six-week low.

According to Kirk Boodry, a researcher at Astris Advisory, SoftBank provides investors with a means to participate in Arm as an artificial intelligence play before its debut.

“A further run once a public prospectus comes out would not be surprising at all,” he said.

“I’m not convinced we are completely out of the woods yet,” as July’s gains may turn out to be ephemeral while “tech seems priced for perfection (again),” Boodry said. Still, the bounce is “worth highlighting,” and Arm’s upside should provide support even if the Vision Fund looks weak, he said.
Source: finance.yahoo.com

According to Boodry’s estimation, the Vision Fund’s public holdings increased by around 1.1 billion dollars in the June quarter. The two companies that contributed the most, DoorDash Inc. along with Grab Holdings Ltd., had increases of 20 per cent and 14 per cent, respectively, throughout the time frame. Coupang Inc. had a 9 per cent increase. In the same time frame, SoftBank’s stocks increased 31 per cent, which was a three-year high.

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Success Story of Softbank Founder Masayoshi Son

Masayoshi Son is a Korean-Japanese technology billionaire, financier, and investor. Masayoshi is the founder, chairman, and CEO of the Japanese holding corporation SoftBank, the Chairman of Arm Holdings, and the CEO of SoftBank Mobile.

Son has the recognition of having suffered the worst financial loss in history (about $70 billion during the dot-com crash of 2000), but as of September 2022, he is ranked 73rd on Forbes’ ranking of The World’s Billionaires 2022.

Early Life

Masayoshi Son was born into a second-generation Zainichi Korean family in Japan.

He was intelligent and inquisitive from an early age and was intrigued by America. He visited the US at the age of 16 years old for a short study abroad program. He subsequently decided to stop going to school in Japan and spend more time in the US. He made the decision to enroll at Holy Names University after high school.

He switched to the University of California after two years and studied computer science and economics there. During this time, he realized that microchips could help him become extremely wealthy and that computer technology will soon alter the business world. He decided to come up with a minimum of one business concept each day to maintain this spirit.

He had over 250 ideas toward the year-end, some of which would later result in enormous riches. In the year 1980, he earned a BA in economics.

Success Story

After earning his degree in 1980, he founded Unison in Oakland, California, which Kyocera eventually acquired. Despite his triumphs, Son left the USA. He established Softbank in Japan in 1981 with two part-time employees and a modest office. During that time, Softbank distributed software packages to Japanese customers.

Within one year, Softbank had already begun to diversify. In 1982, the company launched two monthly magazines concerning software and PCs. By the late 1980s, Softbank had developed an incredibly well-liked system that allowed customers all throughout Japan to select phone operators that offered the most affordable rates for local and long-distance calls.

But it was Softbank’s investment in Yahoo that gave it public attention. Yahoo’s largest shareholder, Softbank, established Yahoo Japan as its Japanese affiliate.

Between 1995-1998, Son staked $374 million on Yahoo, and at its height, his investment had generated a 50-fold profit. Son had made investments in several tech firms by the late 1990s, like Kozmo.com, SportsBrain, and More.com.

The dot-com crash

Son was particularly hard-hit by the dot-com crash in 2000. 99% of the value of Softbank’s shares was lost, according to experts, making it the largest single-person wealth loss in history. Although it was a devastating blow, Son was unflappable. He made an effort to restore his empire by starting a new company that offered broadband services in Japan.

Before being able to acquire Vodafone Japan in 2006 for almost $15 billion, SoftBank tried for years to break into the burgeoning mobile industry. At the time of its takeover, Vodafone Japan was right on the edge of bankruptcy, but Son nevertheless managed to position himself as a strong player in the Japanese phone industry.

Today, his company SoftBank Mobile is the most successful telecom company in Japan. In 2013, he acquired Sprint Nextel, an American telecoms holding company, for $22 billion in 2013. Sprint is currently the fourth-largest provider of wireless networks in the USA.

He also took another action during the 2000 dot-com crash that shaped his career for the following ten years. He invested over $30 million in Alibaba, a relatively unknown Chinese company at that time.

Alibaba has since grown to be among the most valuable businesses worldwide, and Softbank’s ownership has now reached an astounding $130 billion, representing a 2240x profit on his initial investment.

With the profits from Alibaba in hand, Softbank is now stepping up its attempts to invest in companies all around the world. It has started a $100 billion Vision Fund to guide the direction of global technological advancement.

Masayoshi Son is one of the most active investors and, through his company SoftBank, has the largest investments in firms like Yahoo! and Alibaba.

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Blizzard-Hit Softbank Releases Buyback After $10 Billion Vision Fund Hit.

Leave a Comment / News, Tech News / By Team YTS

Due to falling stock prices in portfolio companies and the burden of Chinese regulatory action on tech companies, Softbank reported a quarterly loss on Monday as its Vision Fund division raised $10 billion (approximately Rs 74,081 crore). Despite the drop in asset value, the Japanese tech company said the stock was devalued and would spend up to 1 trillion yen (about Rs 65,297 crore) to buy about 15% of the stock.
SoftBank CEO Son Jeong-eui compared the company to a swan carrying golden eggs, and Monday’s results highlighted problems in the investment industry.
“We’re in the middle of a blizzard,” Son said at a press conference, adding that the Vision Fund’s quarterly performance was “not proud.” Nonetheless, he stated that the company is making steady progress toward doubling the number of “golden eggs” compared to the previous year.
Alibaba, a Chinese e-commerce company, saw its value plummet by nearly a third in the second quarter, the group’s most valuable asset. It paid $ 12 billion (roughly Rs 88,897 crore) for a 7.5 percent stake in Chinese ride-hailing company Didi (approximately Rs 55,569 crore).
Coupang’s online store also lost a third of its value. Kirk Boudry, an analyst at Redex Research, said, “The strategy of disclosing information to increase value has not worked this year.

Crude Lever

According to Son, the primary metric for measuring performance should be the change in the value of the company’s assets rather than profit. In the three months to September, asset values fell by 23% to $187 billion (roughly Rs. 13,85,221 crore).
While SoftBank’s stock trades at a 50% discount, lower than the record gap that prompted the company to launch a JPY 2.5 trillion (roughly Rs. 1,63,241 crore) buyback last year, the conglomerate now has the cash to do so, according to Son.
“I’m excited because we’re undervalued in comparison to our true potential,” Son said.
To boost returns, investors have been calling for a buyback. Repurchased shares will be retired, lowering the bar for SoftBank’s largest shareholder, SoftBank founder, and CEO Masayoshi Son, to launch a management buyout.
“The buyback gives them a crude lever to influence the discount at which the shares trade,” said Boodry, who added that the slower pace could reduce share price volatility.
The Vision Fund’s India portfolio, which includes ride-hailing company Ola and logistics firm Delhivery, has the potential to provide future upside.
In an interview with Reuters, Navneet Govil, Vision Fund’s chief financial officer, said, “The pipeline is very robust.”
According to Govil, the Southeast Asian ride-hailing company Grab’s planned listing via a merger with a special purpose acquisition company (SPAC) will provide additional valuation gain.
The company’s net loss was 398 billion yen ($3.5 billion), down from a profit of 628 billion yen the previous year. The investment loss of the Vision Fund totaled 1.167 trillion yen.
Following the expiration of lock-up periods, SoftBank has been raising capital by selling off stakes in companies like Uber Technologies and DoorDash.
The company has returned $ 9.8 billion to investors (roughly Rs. 72,611 crores) and is focusing on investing another $40 billion (roughly Rs. 2,96,372 crore) in pledged capital from Softbank and Son.
The second fund had invested $33.5 billion in 157 startups by the end of the quarter. Eight of the companies have already gone public.
SoftBank’s stock, which has lost nearly a quarter of its value this year, fell 0.77 percent to 6,161 yen ahead of its earnings report on Monday.

Team YTS

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