SoftBank's bleedin' (and Ma's not alright)

Only hours before SoftBank Group (SBG) posted a dreadful set of financial figures for fiscal 2019 (ended March 31), the Japanese behemoth announced that Jack Ma, co-founder of Chinese e-commerce giant Alibaba, had resigned from the SBG board. He steps down on June 25.

Ma and Masayoshi Son, SBG's wheeler-dealer CEO, have been business buddies for some time, stretching back to 2000 when Son made his smartest investment move by acquiring a stake in Alibaba.

It's not entirely clear why Ma resigned after 13 years on the SBG board, other than the SoftBank claim that he left for "personal reasons." There may well be something in that. Ma is also retiring as executive chairman at Alibaba in September to concentrate on philanthropic projects.

Then again, it's not too much of a stretch to think that Ma hasn't been too happy lately with his old business pal. In a panel conversation with Son in December, when the topic of Softbank's $100 billion "Vision Fund" cropped up, Ma warned that "too much money" inevitably leads to a "lot of mistakes."

Sadly for Son, Ma was onto something. Largely thanks to a series of investment misfires by the Vision Fund, which Son assembled in collaboration with investors from Saudi Arabia, SBG's FY 2019 financials are awash with red ink.

Although the SBG X-rated horror show was trailered with warnings about humongous losses and write-downs, it was even a little scarier than imagined. Vision Fund's annual losses were 1.9 trillion Japanese yen (US$17.7 billion), as opposed to the previously anticipated JPY171.65 billion ($16.7 billion) loss.

COVID-19 has not helped Vision Fund's performance, although Son's critics – which seem to include Ma – accuse him of being too hasty in making huge punts on young tech companies. WeWork, an office-sharing startup, is probably his most egregious mistake. SBG took a JPY721 billion ($6.7 billion) hit on this disastrous investment.

During FY 2019, SBG racked up a record operating loss of JPY1.37 trillion ($12.8 billion), a horrendous collapse from the previous year's operating income of JPY2.1 trillion ($19.6 billion).

In response to the balance sheet carnage, SBG withheld dividend guidance. Son has also taken measures to reduce debt by embarking on a program to sell assets and bolster shareholder confidence through massive share buybacks.

— Ken Wieland, contributing editor, special to Light Reading