More Trouble For SoftBank As Jack Ma Resigns?

Must Read

Net Worth Of Jeff Bezos Is More Than Combined Net Worth of India’s Top 10 Richest People!

Jeff Bezos and the phrase 'World's Richest Person' has become synonym to each other. But after the...

Search Engine Optimization In Digital Era: Look Beyond Traffic

Search engine optimization, aka SEO, plays a vital role in today's online world, especially if it's about...

After Banning Apps, India To Clamp Down On Startup Investments From China

The recent border conflict between India and China has led to the Indian Government to actively take...

The year 2020 has been extremely brutal for SoftBank Group, the Japanese multinational conglomerate. Now, to make things even worse, 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, who is co-founder and former executive chairman of the Alibaba Group, served 13 long years as a board member of the SoftBank Group and will finally resign on June 25th of this year.

Advertisements

Jack Ma is not the only major loss SoftBank needs to deal with. His 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.

The resignation of Jack Ma has come at the time when SoftBank is already going through a tough phase. Analysts believe that despite smooth and frictionless departures such developments in a quick session could have a direct impact on the confidence of investors in SoftBank.

The Struggle Of SoftBank

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.

Last year, SoftBank agreed to buy back the shares of WeWork from Adam Neumann the former CEO, Benchmark Capital and several others as part of a bailout package last year.  However, in mid-March of 2020, it happened to notify the stockholders that some of the conditions of the deal have not been met properly due to which SoftBank will be pulling the offer. As of right now, of the entire tender offer, only $450 million has been allocated to current and former employees, according to sources who have information regarding this failed deal.

After this fiasco, in quick succession, the Japanese telecom and tech conglomerate, 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.

Advertisements

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. The onset of a recession in almost all parts of the world led to most of their portfolio companies starting to report huge slumps in business and their revenues drying up rapidly. OYO Hotels & Homes, in which 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.

Son, in a recent interview, also reportedly mentioned that 15 out of SoftBank’s 88 portfolio companies are now being predicted to go bankrupt because of the business slowdown sparked by the worldwide breakout of COVID-19.

But that’s not all SoftBank hs got to deal with; 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. The trouble is mounting as the largest investor of the first Vision Fund, Saudi Arabia has given cold shoulders to SoftBank for the second round of Vision Fund.

SoftBank Board: The New Guards

At its general meeting on June 25, SoftBank will be proposing three new appointments to the board. Yoshimoto Goto as the group Chief Financial Officer and Lip-Bu Tan and Yuko Kawamoto as outside directors.

Lip-Bu Tan is presently the CEO of chip design software firm Cadence Design Systems and the Chairman of Walden International which is venture capital firm. On the other hand, Yuko Kawamoto happens to be a professor at Waseda Business School and will become the only female board member on the SoftBank Group.

As of now, to mitigate the constant losses SoftBank Group has been making, 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.

Now it remains to be seen what the future holds for the SoftBank Group, especially in the absence of old guards which have has proven tracked record. Will the new members could pump in new energy by making their presence felt, which is essential to bring the glory days of SoftBank back? We will keep you updated on all future developments. Until then, stay tuned!

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Will The Ban On TikTok Be Revoked?

The ban on TikTok is the talk of the town. All hell broke loose for Tiktok when...

Global 5G Chipset Market: $22.41 Billion By 2026, Driven by 5G Smartphones

As the world has started shifting from 4G to 5G era, the global 5G chipset market has started attracting the eyeballs of...

Launch Of JioMeet Will Make Zoom To Be The 60th Chinese App To Get Banned In India?

Today as soon as the launch of JioMeet was formally announced by Mukesh Ambani, the frontman of Reliance Industries, people quickly found...

Intel Invest in Jio Platforms: A Chance For Redemption In The Smartphone Market?

If you thought Mukesh Ambani was finally going to stop the stake selling spree in Jio Platforms after RIL was recently announced...

With The Launch of JioMeet Reliance Sets Its Eyes On Video Conferencing Market!

The race to dominate the video conferencing market has just become more interesting. As we are going through the...

Facebook To Shutdown Lasso, The TikTok Competitor: A Well Calculated Move?

By now almost everyone is aware of how Facebook Inc. (NASDAQ:FB) always attempts to copy every other popular app that tries to...

In-Depth: Dprime

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one...

Fantastic 4: Four Day Work Week A Flashpoint Of Innovation?

It has been an idea that has been mooted by many, perhaps also somewhat sceptically. From being a dark horse to becoming...

TikTok Is Facing The Wrath Of People Who Love It The Most

Ever since the popular social media app TikTok entered India, it has been growing very aggressively in terms of users. Within a...

More Articles Like This