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SoftBank Shuffles Board, Alibaba’s Jack Ma Quits amid Losses

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Today, SoftBank Group (OTCMKTS:SFTBY) announced that Jack Ma resigned. He’s the co-founder of China’s e-commerce giant Alibaba Group (NYSE:BABA). Jack Ma has served the SoftBank’s board for over ten years. Meanwhile, his resignation wasn’t a surprise. He wanted to dedicate more time to education philanthropy. In September 2019, Jack Ma pulled back from his formal business roles as Alibaba’s chairperson and Daniel Zhang became the CEO.

Late last year, Tadashi Yanai, the founder and CEO of Uniqlo parent Fast Retailing, also stepped down from SoftBank’s board to focus on his fashion business.

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Management changes

After the news about Jack Ma’s departure, SoftBank CEO Masayoshi Son announced several changes to its management. The company proposed to nominate three new directors to the board at its annual general meeting on June 25. The three new directors are:

  • Yoshimoto Goto, the group CFO
  • Lip-Bu Tan, the CEO of software firm Cadence Design Systems
  • Yuko Kawamoto, a professor at Waseda Business School

Notably, the board will expand to 13 members.

The changes in SoftBank’s board come after activist investor Elliott Management pressured the company to improve the board’s diversity. Elliott Management also wanted the company to form a new subcommittee to look into the $100 billion Vision Fund. The fund reported its third consecutive quarterly operating loss today after Jack Ma announced his departure.

Analyzing the losses

Jack Ma’s resignation comes at a time when SoftBank struggles with losses. On Monday, the company posted its largest annual loss amid the coronavirus pandemic. The disappointing results were due to SoftBank’s investment in tech companies that were hit hard by the ongoing COVID-19 crisis. SoftBank invested in WeWork, Uber Technologies (NYSE:UBER), and other technology-related companies.

In an earnings release, the company recorded an annual operating loss of 1.36 trillion yen or $12.7 billion in fiscal 2019, which ended on March 31. This was SoftBank’s first annual loss in 15 years. Last year, the company reported a profit of $19.6 billion. SoftBank’s Vision Fund business lost 1.9 trillion yen or $17.7 billion in the fiscal year after the value of its investments in WeWork and Uber decreased. Notably, Uber stock is at a discount of 31% from its 52-week high levels.

SoftBank’s buyback plans to boost stock

In another news, SoftBank’s board has approved a share repurchase plan of 500 billion yen or $4.7 billion, which should boost its stock price. The share repurchases were part of a 2.5 trillion yen buyback program announced in March. The company has already bought back over 250 billion yen of its shares at the end of April.

In March, SoftBank planned to raise $41 billion. The company planned to sell some of its assets to pay down its debt and fund its share repurchase program. To raise the company’s cash, it planned to sell part of its stake in Alibaba stock. The company also wanted to sell part of its stake in Sprint, which has merged with T-Mobile (NYSE:TMUS).

SoftBank stock closed down by 1.08% on May 15 at $21.16. At this closing price, SoftBank’s market value is $88.09 billion.

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