Softbank Group Corp SFTBY record $23.4 billion quarterly loss, pledge of heavy cost-cutting, and self-criticism could push its founder Masayoshi Son to reconsider a management buyout, the Financial Times reports.
Analysts and investors said the latest results reflecting SoftBank's preparation to sell critical operations like Fortress Investment Group and higher focus on its two Vision Funds raised questions over whether it still needed to be listed.
Son has discussed the option of taking SoftBank private over the past three years but had yielded, partly due to pressure from its biggest Japanese banking lenders, notably Mizuho.
SMBC Nikko analyst Satoru Kikuchi argued that once the initial public listing of the British chip designer Arm was complete, SoftBank would be a pure investment company and a fundraising vehicle.
"It is raising these funds with debt, so there is little reason to be listed on the stock market," said Kikuchi. "We think changes in the very form of the company, for example, an MBO, could be coming in the not-too-distant future," said Kikuchi.
Mitsushige Akino, chief investment officer at Ichiyoshi Asset Management, who had already sold out of the fund's investment in SoftBank, expressed a similar opinion.
David Gibson, an analyst at MST Financial Services, said the unlisted portions of SoftBank's holdings could take another 12 to 18 months to reset. However, he noted that more than 80% of SVF companies now had enough cash to sustain them for two years.
Kirk Boodry, a Redex Research analyst, saw that SoftBank's investment losses over the past two quarters had left the two Vision Funds roughly where they were two years ago before the tech rally and subsequent hangover.
Further, a growing loss of key executives put more pressure on founder Son coinciding with the bleak outlook for the Japanese conglomerate.
Price Action: SFTBY shares traded lower by 6.63% at $19.52 on the last check Tuesday.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.