The Malta Independent 8 May 2021, Saturday

SoftBank breaks free from a troubled year

George M Mangion Tuesday, 13 April 2021, 10:25 Last update: about 24 days ago

Masayoshi Son (pictured) is a Japanese investor who created Softbank (now with version 2) which he wants to mimic a "virtual Silicon Valley", meaning a platform on which unicorns (start-ups that turned to become a billion dollar marvel) can offer each other contacts and advice, buy goods and services from each other and even join forces.

Son told CNBC that people should brace themselves for the proliferation of artificial intelligence as it will change the way we live within three decades. Son, who founded SoftBank in the 1980s, has grand visions of what technological advancements the future holds. SoftBank's subsidiaries are pushing the frontiers of technology in areas such as the "Internet of Things" artificial intelligence and deep learning.

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For this purpose, the Vision Fund is aggressively competing with traditional technology investors in Silicon Valley in a no-holds-barred fight for talent.

SoftBank has surged, reaching the highest close since the company went public in 1994 and flying past a long-standing record two decades ago, as a boom in tech companies helps lift SoftBank's portfolio. Son believes he has a unique ability to predict future technology trends and gallantly states he is ready for the gamble.

When it comes to the use of artificial intelligence in powering complex robotics, these reduce the cost of manufacturing. One may ask? Who is funding such expensive research? The answer is a cohort of venture capitalists who are constantly poised to look out for talented persons in their ongoing recruiting outreach. It isn't uncommon for research firms to seek top notch university graduates who show leadership potential. A vivid example of investing in cutting-edge technology is SoftBank.

This organisation is synonymous with its charismatic founder that is reshaping global tech with its colossal treasure box. It is shaking up the cosy world of Silicon Valley venture capital.

One may ask? How can this help humanity fight the scourges of the latest pandemic. The answer is that its ability to analyse large volumes of scientific data involved in the research by medical staff helps in their quest to combat the Covid-19 strain.

This is improved by using AI facilities. In passing, one may feel that the disruptive path of this new technology is constantly looking for champions with aggressive investment appetite to nurture new ventures. Readers appreciate this disruptive technology has a benign purpose and is helping in various ways such as to link various civilizations, improve crop yields, scan persons for trace of infection in airports, schools and much more and speed up progress in complex human Genome classification.

AI in machines can even do medical assessments during epidemics when over-worked doctors are busy tending the sick. Imagine how soon, there will be robots which are efficient and devoid of emotions quietly supervising hundreds of complex factory operations; possibly during the temporary absence of workers cordoned off under an extended quarantine mandated during pandemics.

Though the pandemic situation may appear grim and we mourn the almost 3 million deaths, it is important to draw attention to AI technologies that can ameliorate some of the most pressing and timely problems that this pandemic has created.

Sadly, last year was not an easy one for SoftBank. The company's losses were slightly higher than its estimates and the Vision Fund reported a loss of $17.7bn. With the pandemic in mind, SoftBank joined other major corporations in declining to forecast its earnings for the coming fiscal year. Because of the virus, it said "it remains difficult to forecast the medium-term impact on the company's business and financial results".

The dismal results were driven largely by SoftBank's big bets on a series of technology-related companies that proved lame ducks; once these had been the darlings of the start-up world. They included WeWork, the office space company and Uber, as well, as poor showings by other companies that have been hit hard by the coronavirus pandemic. Further negotiations were undertaken over the new year to solve financial difficulties on such acquisitions.

This year SoftBank Group Corp reached a settlement with WeWork's special committee and the company's co-founder and former chief executive, Adam Neumann; putting to rest a legal battle dating back to 2019. In just a few months, WeWork went from a Unicorn champion status to almost facing bankruptcy. The Vision Fund had to make a face-saving bailout of WeWork and in the process impair its investments.

The honeymoon started when SoftBank was declared the new owner of WeWork, but the champagne did not flow long after the initial party. On a positive note SoftBank was ranked second globally for Voice App Experience, which measures the quality of experience for over-the-top (OTT) voice services - mobile voice apps such as Line, WhatsApp, Skype and Facebook Messenger, among others.

SoftBank has strived to improve telecommunication quality and speeds so customers can enjoy mobile communications, the Internet, video-streaming services and social platforms stress-free. In a true spirit of resilience, SoftBank will continue to build a telecommunications environment that is convenient for customers, as well as provide services and solutions that meet their needs.

SoftBank was the global winner for Video Experience, a metric that measures the quality of video streamed to mobile devices by measuring real-world video streams over an operator's network, and Games Experience, a new category that analyses latency and the overall gaming experience when using an operator's network.

Moving on, we note how a new invigorating spree has seen SoftBank buy a 40% stake in the Norwegian robotics company, AutoStore in a deal worth €2.4bn.

This is a scoop and adds a feather in Softbank's cap. It comes as no surprise that AutoStore is a prodigy company, which develops warehouse automation technology. It is well respected for its cuboid systems that reduce the space needed to store goods. It is no exaggeration to laud AutoStore when it proudly admits that it has deployed 20,000 robots across 35 countries.

Its top clients include Puma and Siemens.

In conclusion, the pandemic has left its mark causing the fair value of futures and options positions scaled down to around the $1bn mark when six months ago these were valued at $2.7bn. We should heed the fighting spirit of Masayoshi Son and may our political leaders be inspired by his achievements and seriously plan our own renaissance post-Covid. 

 

The writer is a partner in PKFMALTA, an audit and business advisory firm

 

 


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