Masayoshi Son’s Eternal Optimism

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There’s a $60 billion reason why SoftBank Group Corp. founder Masayoshi Son might be feeling a little depressed. His company has lost more market value in the past year than in any 12-month period over the past two decades, while his portfolio of private and public companies faces continued turbulence. And yet, Son remains resolutely optimistic.

” I have no doubt. Whatever changes happen, I have never doubted,” Son told shareholders Friday of his belief in the information revolution that is the underlying thesis of his investment strategy.

From falling stock prices to failed merger deals, the 64-year-old has found an edge in nearly every problem his conglomerate has faced in the past year. And he needs it. Its handful of investment vehicles, led by the SoftBank Vision Fund, has stakes in more than 470 companies. Few of them have hit a home run, but they will. Maybe.

Son’s acolytes believe the Japanese billionaire’s undying faith in the information revolution – a global economic shift that puts data at the heart of commerce – will eventually pay off. Investing in various businesses, he bets that a rising tide will lift all boats. But the challenge will be for the company to stay afloat long enough for the tide to turn in its favor.

With almost $300 billion in debt and a weakening yen, Son needs to stabilize for a few years until he can realize the gains he is so confident will eventually come.

A major setback in servicing that debt was SoftBank’s failed $40 billion sale of chip company Arm Ltd. to Nvidia Corp. Regulators around the world feared it was too powerful a company and rejected the merger. Yet Son even put a positive spin on the failure, saying it was a good thing he could hold on to British society for longer.

While demand for the IPO in the current market environment remains to be seen, Son said he has received “love calls” from several exchanges seeking to host the public offering, with the company anticipating apparently to register a partial stake in London. Already bullish on Arm, Son explained his prediction that the chip designer could be worth something similar to the “GAFA” quartet of Google, Amazon, Facebook and Apple – or an order of magnitude higher than the value of selling to Nvidia. .

While that might be typical Son exaggeration, there’s reason to suspect he’ll pull it off. On the one hand, for its lenders, SoftBank itself is too big to fail – a classic example of the adage that if you owe the bank $100, that’s your problem, but if you owe $300 billion dollars in the bank, that’s the bank’s problem. Money is still essentially free in Japan, where there are no signs that the central bank is joining the rest of the world in raising rates – a scenario in which SoftBank would be the least of the country’s problems. And for now, banks will still be lining up to allow SoftBank to roll over its bonds, long before it has to sell off its top assets. Even then, Son predicted that no more than three companies in his extensive portfolio would ever be successful on the scale of his winning punt on Alibaba Group Holding Ltd.

During parts of the shareholder meeting, it was easy to see where Son got his (over)confidence. Some of the investors asking questions sounded more like cheerleaders, with one urging Son to be the ‘light of hope for all mankind’ by staying at the helm of the company until until he reaches the age of 100. Hopefully Son hears more critical voices in the conference room. At least Ken Miyauchi, a longtime lieutenant and chairman of SoftBank’s mobile unit, admitted on Friday that he had periods when he was “full of doubts” about the company’s stock price.

For wary investors, Son has a message: if you can’t stand the thrill, you’re free to drop in.

“Looking at the stock price from a 10- or 20-year perspective, it’s constantly going up, but in the short term it’s going up and down,” Son said. “If you can’t take it, then it’s better for you if you don’t – for the sake of your health.”

It would be hard to recommend the faint of heart to invest in SoftBank. But as a typically explosive SoftBank video promised, “desperation can turn into hope.” The message was not intended for restless investors, but perhaps they can take comfort nonetheless. Even if no one else does, Son still believes. More from these writers and others on Bloomberg Opinion:

• SoftBank’s Son Has Survived Bigger Disasters: Gearoid Reidy

• SoftBank needs to stop buying and start selling: Tim Culpan

• SoftBank’s arm is the highest rated in London: Chris Hughes

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.

Gearoid Reidy is a Bloomberg News editor covering Japan. He previously led the breaking news team in North Asia and was the deputy chief of the Tokyo bureau.

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