SoftBank profits plunge 99%, dragged down by Vision Fund losses - CNN

The Japanese tech conglomerate on Wednesday reported operating income of 2.59 billion yen ($23.6 million) for the three months ended in December, a plunge of 99% compared to the same period a year earlier.

SoftBank (SFTBF) founder and CEO Masayoshi Son's closely watched $100 billion Vision Fund was the biggest driver of those losses. The Vision Fund and a related fund reported an operating loss of 225 billion yen ($2 billion) for the quarter, blaming unrealized losses in WeWork and Uber (UBER) for the hit.

Son confirmed at Wednesday's earnings presentation that the fund's recent poor performance — and the accompanying deluge of bad news — has spooked potential investors in his next mega tech fund.

Last year, SoftBank announced it had signed memorandums of understanding with more than a dozen companies to form Vision Fund 2. The company said at the time that it expected to raise $108 billion from companies such as Apple (AAPL), Microsoft (MSFT), Foxconn Technology (HNHPF) and Standard Chartered (SCBFF).

But WeWork's failed IPO and Uber's declining share price "have caused concern amongst potential investors in SoftBank Vision Fund 2," Son said through an interpreter. SoftBank spent roughly $10 billion bailing out WeWork after a disastrous attempt at going public last fall. Uber's stock, meanwhile, has lost 8% of its value since its public debut in May.

"At the moment, I think that our next fund size should be a little bit smaller, because we have caused concerns and anxiety to a lot of people," Son said.

Asked whether Vision Fund 2 could be funded entirely with SoftBank money, Son switched to English, saying: "We can make investment by ourselves. But we have partners who want to work with us, so we'd like to be flexible."

Jefferies analyst Atul Goyal said that Son and other executives need to spend more time harnessing value from other assets.

SoftBank management "spends almost all of its time on (the Vision Fund) and investment securities," Goyal wrote in a note on Tuesday, before the earnings report.

Until SoftBank gives "due importance" to assets such as its stakes in Alibaba (BABA) and chip company ARM, its stock will remain undervalued, Goyal said.

Son believes SoftBank shares trade at a discount of more than 50%, saying on Wednesday that they should be priced at 12,097 yen ($110).

SoftBank is also starting to feel some outside pressure. Earlier this month, activist investor Elliott Management revealed that it has built a "substantial" stake in the company, and is pushing for changes to improve its performance.

Son said that he had meetings with Elliott about two weeks ago, describing the discussion as "open" and "good." SoftBank and Elliott are aligned on several issues, such as a share buyback and upping the number of independent board members, he said.

SoftBank's board is comprised of 11 members, of which only two are classified as independent.

Elliott Management and many analysts who cover SoftBank also want better transparency on the Vision Fund.

The fund, which is mostly operated by London-based SoftBank Investment Advisors, is "regulated under UK law, so we of course follow all regulations for the fund's operations," Son said. "But we'd also like to offer more efforts for enhanced governance and transparency."

Pushed for specifics on how Vision Fund investments are performing, Son said "almost 30 companies in the portfolio recorded a gain, and 30 or so companies recorded a loss, including non-listed companies." He declined to give details on private companies, citing confidentiality agreements.

Among the eight companies in the fund's portfolio that have gone public, five have recorded gains, and three have booked losses as of the end of the December. The biggest winner was cancer diagnostics firm Guardant Health (GH), which gained $1.9 billion for the Vision Fund, and the biggest loser was Uber (UBER), which recorded a loss of $1.06 billion through the end of last year.

The earnings report comes less than 24 hours after a US court approved the $26 billion merger of T-Mobile (TMUS) and Sprint (S), the US carrier SoftBank acquired nearly a decade ago.

Shares in SoftBank rallied on the Sprint news, closing up 12% in Tokyo, ahead of the company's earnings report.

Sprint "has been a major distraction for (SoftBank) since 2012," Goyal said, adding that the merger and all the years Son spent trying to turn around Sprint has "brought little in terms of results."

Offloading Sprint would remove some $44 billion of debt from SoftBank's books.

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2020-02-12 11:04:00Z
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Does China have the financial clout to repair its coronavirus-damaged economy? - South China Morning Post

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1. Does China have the financial clout to repair its coronavirus-damaged economy?  South China Morning Post
2. Germany confirms two new coronavirus cases, virus likely came from bats  CNBC
3. Coronavirus cases fall, experts disagree whether peak is near  Reuters
4. China disinfects entire cities to fight coronavirus outbreak, some twice a day  South China Morning Post
5. Coronavirus outbreak could affect U.S.-China trade deal: report  MarketWatch
6. View full coverage on Google News

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2020-02-12 10:15:08Z
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T-Mobile-Sprint merger approved by federal judge - GSMArena.com news - GSMArena.com

The deal between T-Mobile and Sprint was stopped in its tracks after an appeal by a group of states, led by California and New York senators.

Reuters reports that a federal judge approved the deal, rejecting the claim that the proposed action would violate antitrust laws and raise prices.

During the trial in December, the carriers said that a joint venture would help the companies challenge Verizon and AT&T, becoming the third-largest carrier with competitive prices and internet speeds. Joining forces would mean T-Mobile’s low-band spectrum and Sprint’s mid-band spectrum will allow for a faster roll-out of 5G network.

The opposition claimed the deal will actually reduce competition and will lead to job losses. US Senator Richard Blumental said the merger will create “another telecommunications behemoth in an already dangerously consolidated market”.

However, the final decision was made by US District Court Judge Victor Marrero, clearing the way for the $26 billion merger. He claimed there wasn’t enough evidence of the deal leading to higher prices and lower-quality wireless services, but both Cali and NY senators promised to appeal and “fight”. A final decision on the deal is expected in July 2020.

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2020-02-12 09:54:02Z
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SoftBank Takes Another Multibillion-Dollar Hit From Bad Bets - The New York Times

SoftBank Group has taken another multibillion-dollar hit from its ambitious but costly bets on once high-flying companies like Uber and WeWork, putting growing pressure on the Japanese conglomerate to get its financial house in order.

The company, which has used its $100 billion Vision Fund to dominate the world of technology investment, has become a target for hedge fund giant Elliott Management, which has been urging changes at the Japanese firm, including governance overhauls and stock buybacks.

On Wednesday, SoftBank may have given Elliott another reason to complain. It said the Vision Fund and other investments cost its bottom line 225.1 billion yen, or about $2 billion, in the final three months of last year.

Overall, SoftBank reported a profit of about $501 million for the quarter, well short of what investors had expected. Its profit was less than one-tenth of what it had posted one year earlier. Its operating profit fell 99 percent.

In November, SoftBank said it had lost $4.6 billion on its investment in WeWork, the office space tech company whose initial public offering imploded spectacularly last fall after the revelation of serious governance issues, including allegations of self-dealing by the company’s chief executive.

The results came one day after a judge in the United States approved a merger between Sprint, which SoftBank controls, and T-Mobile, another American wireless carrier.

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2020-02-12 08:12:00Z
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SoftBank shares jump 13% after Sprint merger approval - MarketWatch

Shares of SoftBank Group Corp. 9984, +11.89% soared more than 13% in early trading Wednesday in Tokyo, as the Japanese conglomerate benefited from a U.S. judge's approval of the merger between Sprint Corp. S, +77.50% and T-Mobile US Inc TMUS, +11.78%. SoftBank is a major stakeholder in Sprint, which saw its shares skyrocket 78% during Tuesday trading in New York. Wednesday's gains marked SoftBank's biggest intraday jump in more than a year. The Sprint approval was welcome news for SoftBank, which has seen some of its major investments stumble of late, including the canceled IPO of WeWork and Tuesday's shutdown of retail startup Brandless. SoftBank shares are up 23% year to date, compared to the Nikkei index's 0.6% gain.

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2020-02-12 03:49:00Z
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Stock market news live: S&P 500, Nasdaq hit record highs, Powell testifies before Congress - Yahoo Finance

U.S. stocks were higher Tuesday, pointing to a second straight day of gains as congressional testimony from Federal Reserve Chair Jerome Powell was under way.

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10:15 a.m. ET: Powell begins delivering prepared remarks to Congress

Federal Reserve Chair Jerome Powell began delivering his prepared remarks before Congress as part of his semi-annual testimony to lawmakers on Capitol Hill.

In his remarks, Powell underscored the ongoing strength of the U.S. economy, now in its eleventh year of expansion, but highlighted the new risks posed by the spread of the coronavirus.

Here’s what Andrew Hunter, senior U.S. economy at Capital Economics, had to say about Powell’s prepared remarks:

Powell noted that while GDP and particularly consumption growth slowed last year, the recent trade truce with China and signs of improvement in the global economy had reduced some of the uncertainties around the outlook. Admittedly, Powell also acknowledged that officials are “closely monitoring” the risks posed by the new coronavirus. But, while the markets are apparently convinced that the virus will force the Fed to cut rates again by year-end, the likelihood of a US epidemic now appears low, and we expect the knock-on impact of the disruption in China to shave no more than a few tenths off first-quarter GDP growth.

As Powell began speaking, markets had priced in an about 82% probability of at least one quarter-point cut to benchmark interest rates by the end of 2020, according to CME Group data.

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9:35 a.m. ET: S&P 500, Nasdaq hit record highs

U.S. stocks were higher Tuesday morning a half-hour before Federal Reserve Chair Jerome Powell delivers remarks before Congress. Both the S&P 500 and Nasdaq hit records high, and the Dow came within two points of a fresh record.

Here were the main moves in markets, as of 9:35 a.m. ET:

• S&P 500 (^GSPC): +0.45% or +15.04 points to 3,367.13

• Dow (^DJI): +0.32% or +84.86 points to 29,361.68

• Nasdaq (^IXIC): +0.45% or +44.05 points to 9,672.44

• Crude oil (CL=F): +2.08% or +$1.03 to $50.60 a barrel

• Gold (GC=F) +0.28% or +$4.40 to $1,575.10 per ounce

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8:02 a.m. ET: Under Armour shares slump after missing fourth-quarter sales expectations

Athletic-wear maker Under Armour (UAA) shares sank more than 13% in early trading after delivering disappointing fourth-quarter sales and projecting a revenue decline in 2020.

The company posted fourth-quarter adjusted earnings of 10 cents per share on net revenue of $1.44 billion, versus Bloomberg-compiled consensus expectations for adjusted EPS of 10 cents on net revenue of $1.47 billion. Closely watched North American sales rose just 1.9% in the quarter, short of the 2.26% rise expected.

Under Armour said it expects 2020 revenue will fall by a low-single-digit percentage compared to 2019’s $5.3 billion in full-year sales. North American sales will likely decline by a high-single-digit percentage, the company said. And Under Armour said it is considering restructuring this year, and that its outlook does not account for any costs that could arise from those potential initiatives.

Under Armour also said it sees a negative impact from the coronavirus outbreak of between $50 million and $60 million in sales during the current quarter.

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7:47 a.m. ET: Stock futures rise ahead of Powell testimony

Contracts on the three major indices rose in early trading and headed toward a second consecutive session of gains as investors eyed ongoing developments with the coronavirus and looked ahead to congressional testimony from Federal Reserve Chair Jerome Powell.

Powell is set to deliver the first of two days of congressional testimony starting at 10 a.m. ET as part of his semi-annual monetary policy report to Congress. In a statement released Friday, Powell characterized 2019’s economy as having grown “moderately,” and with the labor market having “strengthened further.”

However, he also called out the coronavirus as presenting “a new risk to the outlook.”

“The recent emergence of the coronavirus,” he said, “could lead to disruptions in China that spill over to the rest of the global economy.”

To date, the coronavirus has infected 43,118 people globally, and the death toll climbed to 1,018, according to the European Center for Disease Prevention and Control. The vast majority of cases and deaths have been confined to mainland China. While some businesses in China resumed operations this week, the restart has been slow-going and fraught with issues as fears over the spread of the coronavirus continue to escalate, according to multiple reports.

Here were the main moves during the pre-market session, as of 7:49 a.m. ET:

• S&P futures (ES=F): 3,362.00, up 9 points or 0.27%

• Dow futures (YM=F): 29,329.00, up 84 points or 0.29%

• Nasdaq futures (NQ=F): 9,567.00, up 39.5 points or 0.41%

• Crude oil (CL=F): $50.56 per barrel, up $0.99 or 2.00%

• Gold (GC=F): $1,573.10 per ounce, down $6.40 or 0.41%

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 6, 2020. REUTERS/Lucas Jackson

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2020-02-11 15:15:00Z
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Sprint's stock soars more than 70% after judge approves T-Mobile merger - CNN

A federal judge ruled Tuesday in favor of the marriage allowing the two telecom giants to combine. US District Court Judge Victor Marrero said in his ruling that he didn't envision the companies "would pursue anticompetitive behavior" and rejected the lawsuit brought on by a dozen US states.

The judge said that Sprint on its own couldn't "continue operating as a strong nationwide competitor." Sprint is currently in fourth place, but the company claimed its path to deploying a nationwide 5G network without T-Mobile was uncertain.

States' attorneys general argued that approving the merger would make wireless service and prices worse for Americans. But Judge Marrero said he was ultimately unpersuaded by the states' economic theories and analytical modeling, writing that the two sides' claims ultimately came down to competing crystal balls. He said he was relying substantially on his own "skills and frontline experience" to reach a decision.

"How the future manifests itself and brings to pass what it holds is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models," he wrote.

Sprint's stock shot up a stunning 70% at the open. T-Mobile shares also spiked 12% early trading Tuesday.

T-Mobile CEO John Legere called the ruling a "huge victory" and said in a statement that the new company, which will retain the T-Mobile name, is "great for consumers and great for competition."

The companies touted the merger's benefits, claiming lower prices, expanded 5G and new jobs. They said the combination will ultimately employ 11,000 more full-time people than the standalone companies would have over the next four years. They said an additional 12,000 jobs will be created to staff 600 new stores and five new "customer experience centers."

The merger could be finalized in early April. A new website has been started to promote the combined companies at NewTMobile.com.

To alleviate antitrust concerns, Sprint and T-Mobile have proposed a deal with Dish Network (DISH), which would buy some wireless assets from the companies to create a new nationwide carrier. The companies hoped that would remedy the merger's effects on the market. They also promised that prices wouldn't rise and accelerate the rollout of new, ultra-fast 5G mobile network.

Two key attorneys general weren't pleased with the ruling.

Letitia James, the AG from New York, said in statement the reduced competition is "bad for consumers, bad for workers, and bad for innovation." She added the state will will examine a possible appeal.

California's AG Xavier Becerra said he is "prepared to fight as long as necessary to protect innovation and competitive costs."

The combination forms a third national wireless behemoth about the size of Verizon (VZ) and AT&T (T). (AT&T owns CNN's parent company, WarnerMedia.)

The merger saga between T-Mobile and Sprint has been ongoing since April 2018 when the current deal was proposed. Federal regulators, including the US Department of Justice and the Federal Communications Commission, already approved the merger last year. The states were the final hurdle, and Sprint (S) and T-Mobile (TMUS) battled for the merger's approval in a Manhattan federal court in December.

FCC chairman Ajit Pai said he was "pleased" with the decision. citing the companies' promise to expand 5G.

"This transaction represents a unique opportunity to speed up the deployment of 5G throughout the United States, put critical mid-band spectrum to more productive use, and bring much faster mobile broadband to rural American," Pai said in a statement. "This is a big win for American consumers."

-- CNN's Brian Fung contributed to this report

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2020-02-11 14:40:00Z
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