Hard times for SoftBank

COMPANIES AND financial vehicles that get into trouble often have common characteristics: high debts, accounting that is hard to understand, opaque assets that are hard to value and managers who have a hard time facing reality. That more or less fits the description of SoftBank, a giant Japanese telecoms and technology conglomerate founded and run by Masayoshi Son, which on November 6th announced a $6bn loss after bailing out WeWork, a loss-making property firm. Speaking in Tokyo, Mr Son put on a defiant display and insisted that SoftBank has a valuable portfolio of tech assets that the outside world does not appreciate. But soon enough, like most troubled businesses, SoftBank will have to confront its underlying weakness: a lack of cashflow to back up all of the hype. It may have to shrink and could end up being broken up.

Mr Son has cultivated an eccentric persona by making dramatic predictions about how technology will change the world and insisting his firm will last 300 years. But SoftBank is no curiosity. After a long expansion binge it is the world’s fifth-most-indebted non-financial firm, with gross consolidated debts of $166bn (after deducting cash the net figure is $129bn). These are owed to banks and investors around the world and to Japanese households. SoftBank controls important companies, including Sprint, an American...



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