Softbank’s 2021 Annual Report: Masayoshi and the Chaotic World

Last week, Softbank released their annual report for the fiscal year which ended on March 31, 2022. A record breaking loss of JP¥1.7 trillion (approx. US$13.3 billion) has caused some rumors – ‘Softbank the goose has laid all its golden eggs’.

Compared to Softbank’s 2020 presentation which featured a goose, this year’s presentation was clearly different in style and focused on ‘守り’ (defence).

Chaotic World

Masayoshi started the presentation with a gloomy slide describing the current situation.

(Translation: Chaotic World – COVID-19 and Russia-Ukraine war)

The whole world is now facing increasing COVID-19 infections, and surging gasoline and food prices. 

(Translation: America’s Consumer Price Index (CPI) percentage increased by 12% between Jan 2020 – Apr 2022)

The Nasdaq composite index also suffered a setback. 

(Translation: NASDAQ Composite Index dropped by 27% in just 5 months)

Softbank is inevitably involved in all this chaos. 

The Truth

Since critics were writing off Masayoshi’s Softbank owing to its drop in stock price, excessive debt and poor financing, Masayoshi showed this data in the presentation:

Until March 2022, out of the Softbank-owned JP¥18.5 trillion net assets, only 20.4% are debt and JP¥2.9 trillion current assets (including cash).

Counterplan

In the presentation, Masayoshi also mentioned about his counterplan:

While ‘defending’, Softbank is going to use arm (a British semiconductor company which Softbank acquired in 2016) to ‘attack’ – the semiconductor that arm produces can be used for smartphones, IoT, cloud services, electric cars, etc. At the same time, Softbank announced their plan to launch arm’s IPO. 

Other than arm, Softbank continued its investment business in 2021. Softbank’s Vision Fund (mainly funding AI tech) together with LatAm Funds funded up to 475 businesses this fiscal year, compared to 164 businesses back in 2020 Q1. 

Survival of the fittest

Just like all other companies, Softbank is inevitably involved in these gigantic macro uncertainties. Nobody knows how long this current stage is going to last – a few days ago a few industrial insiders discussed this problem in the All In Podcast – some said 4-6 months while some said 2 years.

However, Masayoshi has been through a couple of cycles like this. When he came up with his “time machine” theory, the internet bubble hadn’t exploded yet. This also explains his ‘defending’ actions right now.

Thus, it’s too early to write off Masayoshi.

Hopefully, the golden egg factory will play Tchaikovsky again.