Almost cleared, Son was defeated and retreated

Author | Wang Siqi

Son made a decision that shocked the world.

Sell Ali! In the form of a near-liquidation, he gave up the investment case that he was proud of all his life.

One

Shortly after Alibaba announced the "most important organizational change in history", the former major shareholder made a new move.

SEC filings show that SoftBank plans to reduce its stake in Alibaba to 3.8 percent through prepaid forward contracts. Historically, every time Son decides to reduce his stake in Alibaba, it is a major signal of the SoftBank crisis.

The surging global capital market is playing out a wonderful drama.

But this big drama, for the "venture capital legend" Masayoshi Son, is somewhat tragic.

In the eyes of the outside world, SoftBank's reduction of Ali is a drop in the bucket. At its peak, SoftBank owned a whopping 34 percent of Alibaba. However, since Son created the SoftBank Vision Fund, the fate of it and SoftBank has been firmly tied to tragedy.

Because of Son's "self-righteousness", the SoftBank Vision Fund has created the biggest hole in the history of global venture capital. Last year, the major projects they invested in were almost completely wiped out, and the SoftBank Vision Fund suffered a crushing failure, with a net loss of about 140 billion yuan.

Even Son lamented, "Whether in the primary market or the secondary market, there is no good performance." SoftBank's life hangs in the balance, and he saved a bit of the dignity of a "VC legend" by selling his Alibaba stake in the third quarter of last year.

Therefore, this has also become a "routine". As long as SoftBank is frustrated, Son will save the game by reducing Ali's holdings. Unlike the previous reduction, SoftBank's loss hole has become larger and larger, and Son himself is in trouble.

According to SoftBank's previous announcement, Son personally owes SoftBank $4.7 billion. And his plan to "go into hiding" is largely to avoid debt. Holes always have to be filled, and he thought of Alibaba, prompting the latest round of reduction plans.

Two

In addition to cashing out Ali to give SoftBank an explanation, Son Masayoshi's other big cause urgently needs money.

In 2016, Son bought British semiconductor company ARM through a $31 billion sale despite opposition. As we all know, Son's trajectory of fame is to rely on the Internet to make his fortune, and it is undoubtedly a dangerous behavior to venture into long-term industries.

Son disagrees with this, he has always had a "scientific and technological dream", intending to seize the opportunity of the transformation of the times to create another "scientific and technological version of Ali". ARM thus became Son's trump card, and its valuation skyrocketed to $60 billion.

With the wealth code in hand, Son Masayoshi is like a spring breeze, and other global semiconductor giants have repeatedly said that they want to buy ARM, but they have been declined. In his view, ARM is worth far more than $60 billion. It was said that the plan could not catch up with the change, and then SoftBank was exposed to huge losses, and Son had to use $60 billion to "parity", and miraculously, there was no giant in the market to take over.

Worried that the baby would be spoiled in his hands, Son lowered the price to $40 billion. Originally, the global semiconductor giant NVIDIA was willing to be the takeover man and acquire ARM. As a result, regulators did not approve the plan, and Son's dream was dashed.

$31 billion bought, raised for a while, $40 billion can't be sold.

Son was depressed.

But compared to SoftBank, which is mired in losses, ARM is lucky, at least the only business that gave Son a fight last year.

According to the performance report released by ARM, the company achieved revenue of US$746 million in the third fiscal quarter of fiscal 2022 (as of the end of December 2022), an increase of 28% year-on-year, and pre-tax profit in the first three quarters increased by 77% year-on-year. Among them, the revenue of licensing business was 300 million US dollars, a year-on-year increase of 65%; Royalty revenue was $446 million, up 12% year-over-year.

At present, the mobile chipsets used by consumer electronics brands in the market basically adopt ARM design and architecture. Global semiconductor giants such as Samsung, Qualcomm, Apple, and MediaTek also need to rely on ARM designs when producing custom chipsets.

In a way, Son is lying on ARM to make money. However, chip semiconductors are also very expensive. This is why Son has always wanted to sell ARM's dream. To engage in chips, to make money you have to invest, invest and make money, where does the money come from?

So Son thought of a way to get out of SoftBank, "say goodbye to venture capital and devote yourself to chip entrepreneurship." In the eyes of some European and American analysts, Son's ultimate goal is to promote the listing of ARM, which is the only way out for the latter.

It is also the way out for Son. Create a "technology version of Ali" and get rid of the mess SoftBank by the way.

Three

When a company goes public, it often brings huge market value growth, which can make Son sweep away the shame of consecutive failures.

Why did this investment tycoon who disrupted the world have such a fiasco?

After all, few people can make a long-term life plan at the age of 19 like Son, and the future is basically realized.

Few investors can fall from the sky like Son. Jack Ma rushed to look for investment, and 5 students took Yahoo PPT and asked him for guidance. The two classic investment cases of Ali and Yahoo have made Son "famous in the history of venture capital".

These two cases also reinforced Son's ambition to make a fortune. In the past, he worked hard to found SoftBank and bought $1 billion in 10 years. Switching to investment, he cashed out countless banknotes without much effort, "with capital in hand, he can do anything".

Driven by ambition, Son embarked on a mad journey. He visited the royal family in the Middle East, Apple, Qualcomm and other giants, and established the $100 billion SoftBank Vision Fund, intending to conquer global unicorns with venture capital.

What Son did not expect was that the SoftBank Vision Foundation would become a nightmare for SoftBank, overturning his fame in the first half of his life.

He also did not expect that the second half of his life would be reduced to "eating the old book", relying on reducing Ali in exchange for a trace of life.

The key is to save and rescue, SoftBank suffered huge losses, SoftBank Vision Fund failed miserably, and he owed $4.7 billion and could not get out.

The only light of day is ARM. The good news is that there is news that Son is going to sign a deal with Nasdaq and that ARM will go public in the United States this fall. The bad news is that there is a big storm around the world, and semiconductor giants led by Samsung and Intel are walking on thin ice. Samsung posted its worst performance since the first quarter of 2009; Intel loses money and CEO has to cut salary by 25%.

The storm is stirring, and it is unknown whether ARM can go public as desired. Right now, for Son, this is crucial. He once again reached a crossroads in his life. If ARM goes public, it is unclear how many holes it can help SoftBank, but Son can untie it.

If ARM isn't listed, how many Alibaba shares does he have to sell?