SoftBank Group quarterly profit wiped out by Vision Fund losses

TOKYO (Reuters) – Japan’s SoftBank Group Corp said on Wednesday its third-quarter operating profit fell 99%, well short of analyst estimates, pulled …

TOKYO (Reuters) – Quarterly profit at SoftBank Group Corp (9983.T) was almost wiped out as the Japanese technology giant was hit for a second straight quarter by losses at its $100 billion Vision Fund.

Wednesday’s dismal results could further dampen investor enthusiasm for founder Masayoshi Son’s big bets on untested start-ups. While Son told a news conference SoftBank had turned a corner, he also said he has been forced to scale back a second Vision Fund while investing with only SoftBank’s own capital.

That marks a major climbdown from July, when SoftBank said it had attracted $108 billion in pledges for a second mega-fund.

More pointedly, it shows how the bailout of start-up WeWork last year and other missteps have put a chill on the tech investing scene and given SoftBank shareholder Elliott ammunition to lobby for change.

“We have caused a lot of concern,” Son said in Tokyo following the results, adding he needs to “give everyone piece of mind” to secure outside funds for Vision Fund 2.

Group profit was 2.6 billion yen ($24 million) in the October-December quarter versus 438 billion yen a year before. The Vision Fund posted an operating loss of 225 billion yen ($2.05 billion) for the quarter compared with a 176 billion yen profit in the same period a year earlier.

But Son, known for an ebullience and charisma that is still rare in corporate Japan, said the company’s performance was already improving.

“The tide is turning,” he said.

BIG STAKE

“Softbank should focus on one thing, shareholder value creation,” said Jeffries analyst Atul Goyal in a note to clients ahead of the earnings.

Son pointed to a rally in prices at the Vision Fund’s handful of listed investments and news overnight that a U.S. federal judge had rejected an antitrust challenge to the proposed merger of SoftBank’s Sprint Corp (S.N) and T-Mobile US Inc (TMUS.O).

Shares of SoftBank finished up 12% in Tokyo before the results and after the U.S. court decision.

Son has long argued SoftBank’s shares are undervalued, a position shared by U.S. hedge fund Elliott Management, which has recently emerged as a prominent shareholder. Elliott, one of the world’s best known activist investors, is pushing for changes including $20 billion in stock buybacks, sources said last week.

SoftBank has held discussions with Elliott and is aligned on improving shareholder value, Son said, adding that while open to potentially buying back shares, he was in “no hurry” to sell part of a 26% shareholding in Alibaba (BABA.N) to fund buybacks.

The Vision Fund, which is backed by Saudi Arabia and has single-handedly changed the face of tech investing, said it had invested $74.6 billion in 88 companies as at the end of December, when those investments were worth $79.8 billion.

Analysts have said it is difficult to evaluate SoftBank’s performance due to a lack of disclosure around Vision Fund’s internal valuations.

Son’s investing credentials took a hit in the August-September quarter when the Vision Fund recorded an $8.9 billion operating loss.

Since then, a slew of portfolio companies – from hotel-booking platform Oyo to cloud robotics firm CloudMinds – have cut jobs and come under pressure to demonstrate the long-term viability of their business models.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

The fund itself has also lost key employees.

($1 = 109.9900 yen)

Reporting by Sam Nussey; Editing by Christopher Cushing, David Dolan and Mark Potter

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Tokyo’s Nikkei closes up on Wall St gains, SoftBank rally

[TOKYO] Tokyo’s key Nikkei index closed higher on Wednesday on Wall Street gains and a near 12 per cent rally in heavyweight SoftBank Group, on …

[TOKYO] Tokyo’s key Nikkei index closed higher on Wednesday on Wall Street gains and a near 12 per cent rally in heavyweight SoftBank Group, on hopes that its US mobile business will improve.

The benchmark Nikkei rose 0.74 per cent or 175.23 points to 23,861.21 while the broader Topix index closed down 0.04 per cent or 0.72 point at 1,718.92.

AFP

Artificial Intelligence Software Will Track Athletes’ Speed at 2020 Tokyo Olympics

Though only a couple of its capabilities were announced, it will essentially use cameras with artificial intelligence and computer vision to show fans …
  • Intel will be using artificial intelligence software to will track certain aspects of an athlete’s performance, such as speed and place, during the Tokyo 2020 Olympics, the company announced in a press release.
  • The technological advancements hope to improve the viewer experience.
  • Other innovations include facial recognition software and virtual reality experiences for fans.

    Ever feel like the broadcasts for running meets lack a few bells and whistles that you may notice during other sporting events? If so, Tokyo 2020 is hoping to change that—and revamp the viewer experience with artificial technology innovations.

    On Wednesday, Intel announced a new partnership with International Olympic Committee (IOC) and the Tokyo Organizing Committee of the Olympic Games, and as part of it, also revealed some of the tech they will have at the event to offer broadcasters in Tokyo next July.

    As a result, track and field fans should be in for a very different viewing experience than they are used to.

    For starters, the tech giant is debuting what they call 3D Athlete Tracking (3DAT). Though only a couple of its capabilities were announced, it will essentially use cameras with artificial intelligence and computer vision to show fans near real-time data during a race. It will provide biomechanical analysis of things like athlete speed, who is in the lead, and distance traveled/distance remaining. This will be displayed on screen during the race and during replays using overlays.

    “Intel is focused on delivering world-class technology integrations at the Tokyo 2020 Olympic Games to improve the experience for athletes, attendees, viewers, and Games staff while also demonstrating how technology can transform businesses. We are excited to make the first of a series of announcements about our role in the Tokyo 2020 Olympic Games,” said Rick Echevarria, general manager of Intel’s Olympics Program, in a press release. “The Winter Games in PyeongChang represented our first collaboration with the IOC and we look forward to extending and deepening that relationship in the years ahead.”

    [Smash your goals with a Runner’s World Training Plan, designed for any speed and any distance.]

    But 3DAT won’t be the only tech on display for running fans. A virtual reality experience will be available for certain events, where fans with VR headsets can get a view that is billed as a more immersive experience than just watching on TV. A similar experience was offered for select events at the 2018 PyeongChang Winter Olympic Games.

    Also on hand at the event will be a facial recognition software called NeoFace. This tech will be used to identify more than 300,000 people including athletes, volunteers, media, and other staff at various entry points of venues and accommodations. The hope is this prevents risks of fraud and reduces long ID-check lines.

    It’s hard to say what all of this additional tech will do to the Games, especially since we are still 10 months out—and Intel is expected to debut even more by then.

    The changes could ring in a new era of sports broadcasting, or it could put a damper on the experience, like when ESPN’s Monday Night Football turned off its new graphic after the first half when fans voiced their outrage.

    We’ll just have to wait until next July to find out.

    Andrew DawsonGear & News EditorDrew covers a variety of subjects for Runner’s World and Bicycling, and he specializes in writing and editing human interest pieces while also covering health, wellness, gear, and fitness for the brand.

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Yahoo Japan nears deal for majority stake in Zozo

Yusaku Maezawa, the flamboyant Japanese entrepreneur who’s set to become the first paying passenger aboard Elon Musk’s SpaceX ride around the …
  • Yusaku Maezawa, founder of Zozo Inc. (right), and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attend a news conference in Tokyo on Sept. 12, 2019. Photo: Bloomberg Photo By Akio Kon. / © 2019 Bloomberg Finance LP
    Yusaku Maezawa, founder of Zozo Inc. (right), and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attend a news conference in Tokyo on Sept. 12, 2019.
    Yusaku Maezawa, founder of Zozo Inc. (right), and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attend a news conference in Tokyo on Sept. 12, 2019.

    Photo: Bloomberg Photo By Akio Kon.

Photo: Bloomberg Photo By Akio Kon.
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Yusaku Maezawa, founder of Zozo Inc. (right), and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attend a news conference in Tokyo on Sept. 12, 2019.
Yusaku Maezawa, founder of Zozo Inc. (right), and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attend a news conference in Tokyo on Sept. 12, 2019.

Photo: Bloomberg Photo By Akio Kon.

Yahoo Japan nears deal for majority stake in Zozo
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Yusaku Maezawa, the flamboyant Japanese entrepreneur who’s set to become the first paying passenger aboard Elon Musk’s SpaceX ride around the moon, is cashing out of the business that made him a billionaire.

Maezawa steps down as chief executive officer of Zozo Inc. Thursday and plans to sell a chunk of his shares as part of a $3.7 billion takeover by Yahoo Japan Corp. Wearing a white T-shirt declaring “Let’s Start Today” atop a peace symbol, he said he was leaving his company behind to create a new business, without specifics. He’ll need to train for Musk’s mission and may even embark on another space project he said again without elaborating.

At times fighting back tears, Maezawa thanked his supporters and reflected on his entrepreneurial career. “I don’t have an MBA or experience working at a company, but next thing I know I became a president, we got many customers and went public,” he told reporters at a press briefing. “The past 21 years were like a dream.”

SoftBank Group Corp.’s Masayoshi Son made a surprise appearance, wearing a matching T-shirt in black. Son said Maezawa had approached him seeking advice ahead of the Yahoo Japan deal. He praised the younger man’s boldness, but joked that he passed on an invitation to fly to the moon. “That’s too scary,” Son said.

Announced on Thursday morning, the deal immediately sent stock prices for both companies up. Yahoo Japan is paying a 21% premium to take control of a valuable online fashion store, which strengthens its challenge against Amazon.com Inc. and Rakuten Inc. in one of Asia’s largest e-commerce arenas. Zozo director Kotaro Sawada will take the helm, while Maezawa has tweeted “I myself will be setting off on a new path” after the sale’s announcement.

“It’s a plus for Yahoo Japan and would help expand their e-commerce operations,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Zozo gets the financial backup it needs for its new venture and overseas expansion.”

Maezawa is departing the company he founded, which was instrumental to amassing his fortune and building up his name. But he’s unlikely to stop defying the norms of Japanese society — the other winning aspect to his unconventional approach to business.

Before Zozo, he skipped college and moved to California to play in a rock band. Returning to Japan, he started his own e-commerce company and built the shopping website Zozotown into a popular destination for younger consumers, starting from the humble beginnings of a mail-order music album business. Maezawa now has a net worth of $1.5 billion, according to the Bloomberg Billionaires Index, but he has tweeted claiming to “have no money. I spend it so quickly.”

Maezawa had been directing Zozo investment toward developing a custom clothing brand, seeking to attract customers through innovative ways of taking individual measurements. His company shipped about 3 million so-called Zozosuits, polka-dot spandex outfits for taking body measurements with the help of a smartphone. But the business was shut down in March. He also said the company plans to launch a foot-measuring device called Zozomat in the fall.

Yahoo Japan, whose biggest shareholder is the local telecommunications arm of Masayoshi Son’s SoftBank Group Corp., saw its shares rise 2.4% in Tokyo, while Zozo surged 13.4%. Among the local online retail competition, Rakuten and Mercari Inc. slid. Investors in those companies feared the Yahoo Japan deal would intensify competition, said Masayuki Otani, chief market strategist at Securities Japan Inc. in Tokyo.

The cost of the acquisition could go as high as 400.7 billion yen, according to the two companies’ announcement, giving Yahoo Japan a 50.1% slice of Zozo.

“Together with Zozo, getting to No. 1 in domestic e-commerce comes realistically within striking distance,” Yahoo Japan’s CEO Kentaro Kawabe said at the Tokyo briefing, adding that the company may capture top share within next five to six years.

– – –

Bloomberg’s Shingo Kawamoto contributed.

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Yahoo Japan plans tender offer for retailer Zozo at $3.7B

Zozo’s stock price jumped 13% in Tokyo trading Thursday, while Yahoo Japan Corp. rose 2.3% and SoftBank Group Corp. edged up 0.2%. ___.

FILE – In this Nov. 20, 2018, file photo, Zozo Chief Executive Yusaku Maezawa speaks during a press conference on the PGA Tour in Tokyo. Yahoo Japan Corp. said Thursday, Sept. 12, 2019 it will put up a tender offer, estimated at 400 billion yen ($3.7 billion), for Zozo Inc., a Japanese online retailer started by a celebrity tycoon. Maezawa is known for lavish spending on artworks by Jean-Michel Basquiat, a Stradivarius violin and a future trip to the moon. (AP Photo/Koji Sasahara, File)

TOKYO (AP) — Yahoo Japan Corp. announced on Thursday a tender offer worth an estimated 400 billion yen ($3.7 billion) for Zozo Inc., a Japanese online retailer started by a celebrity tycoon.

Zozo Chief Executive Yusaku Maezawa told reporters at a Tokyo hotel that he was stepping down to devote more time to training for a trip to the moon in 2023. He has plans to ride on Elon Musk’s Space X rocket.

Maezawa owns nearly 37% of the company and will sell nearly 93 million of his more than 112 million shares, according to the plan. Yahoo Japan will own up to 50.1% under the tender offer, set for early October, it said.

Maezawa, known for lavish spending on artworks by Jean-Michel Basquiat and a Stradivarius violin, said he also intends to announce later plans for another business.

“I was so moved by that feeling of building something from scratch,” he said of starting his company 21 years ago when he still lived with his parents.

“I want to thank all the employees for supporting and following someone who is so lacking like me. We laughed and we cried together. We had fun,” he said, choked with emotion.

Maezawa, 43, started out running an import CD business and played in a rock band before he founding his online fashion business with a shopping site called Zozotown when online retailing was still new in Japan.

Recently he drew attention for his Zozosuit, a so-called wearable technology that takes body measures with a software application so that clothes are made to fit.

He never graduated college and is known for a free-wheeling managerial style and corporate culture that are rare in Japan’s staid business world.

Zozo’s tagline is: “Be unique. Be equal.” It said in a statement that becoming a subsidiary of Yahoo Japan will bring stability and a solid partner.

Succeeding Maezawa at Zozo’s helm is Kotaro Sawada, who joined the company about 10 years ago after working at Japanese telecommunications giant NTT Data Corp.

Sawada told reporters that after 21 years it was time for Zozo to grow up. But he promised Zozo will remain creative, and not become boring.

Kawabe said Yahoo, whose revenue comes mostly from advertising, will be able to expand its e-commerce business by adding Zozo. Yahoo aims to be No. 1 in online retail in Japan, he said.

Also appearing at the event was Masayoshi Son, chief executive and founder of SoftBank and a top shareholder of Yahoo Japan. Son acknowledged he had urged Maezawa to stay on as Zozo’s chief.

Son and Maezawa appeared on stage wearing matching T-shirts designed by Maezawa that said “Let’s Start Today” with a peace sign. Zozo originally was named Start Today.

“I guess he wants to live the life of a rocker so I understand,” Son said with a laugh. “I envy him.”

Hiroko Sato, an analyst for Jeffries, said the deal will likely benefit both sides. Yahoo may gain more online shoppers by acquiring Zozo, with its younger customer base.

But Yahoo faces formidable competition from Rakuten in Japan, she said. Amazon is another powerful rival.

“Our initial impression is positive for both companies,” she said.

Zozo’s stock price jumped 13% in Tokyo trading Thursday, while Yahoo Japan Corp. rose 2.3% and SoftBank Group Corp. edged up 0.2%.

___

Follow Yuri Kageyama on Twitter at https://twitter.com/yurikageyama

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