SoftBank Group Corp. founder Masayoshi Son aims to stay at the helm of his company longer than originally planned to focus on the burgeoning business field of artificial intelligence, but is now under increased scrutiny over his longer-term strategy after the surprise departure of his successor.
Son faces a number of challenges, including turning around U.S. mobile network provider Sprint Corp., a SoftBank group company. And most recently, the abrupt resignation of SoftBank President Nikesh Arora, the heir apparent credited with making bold overseas investment decisions, has raised uncertainty about the conglomerate’s investment business, analysts say.
Arora’s departure, coming less than two years since he joined SoftBank from Google Inc., caught many off guard, putting the company’s succession planning back to square one.
“SoftBank is known to do the unexpected,” said Tsutomu Yamada, market analyst at kabu.com Securities Co.
“The bottom line is he has been and will be the commander in chief. With Mr. Arora leaving SoftBank, there are more uncertain factors than before regarding its prospects,” he added.
Facing over 2,000 shareholders at their annual meeting on June 22, Son said he had wanted the 48-year-old former Google executive to succeed him when he turns 60.
But Son, 58, revealed he changed his mind because he became “somewhat greedy” in anticipation of what he described as “the biggest paradigm shift in human history,” triggered by advancing AI. “The day is approaching when we will see not just the knowledge but the wisdom (of AI) far surpassing humans.”
A growing number of companies such as Google are counting on AI as the next big thing and key to their future. Japanese companies, for their part, are also scrambling to get an edge over competitors.
Toyota Motor Corp. has set up a company that focuses on research and development of AI and Honda Motor Co. plans to expand its research in intelligent technologies as they both develop automated driving cars. Industrial conglomerate Hitachi Ltd. and tech company Panasonic Corp. are also working with universities in the field of AI.
Since its establishment in 1981, SoftBank has carried out a series of acquisitions and morphed into a telecom and Internet giant that also focuses on new areas such as AI and the Internet of Things.
Pepper, a humanoid robot that uses a cloud-based AI system and can read human emotions and communicate, has proven popular as SoftBank is promoting wider use of robots in various aspects of everyday life.
Still, analysts believe there is a long way to go before AI can deliver sustainable profits as a business, and companies will need to make huge investments to make it happen.
For now, SoftBank’s immediate priority is to help Sprint get back on its feet after years of struggling to return to profitability.
Before Arora resigned, SoftBank announced a series of asset sales totaling around $18 billion, with analysts focusing on where the money generated will be spent.
It sold part of its stake in Alibaba Group Holding Ltd., China’s e-commerce titan whose future, Son said, is undoubtedly promising, and agreed to sell a majority stake in Finnish mobile game developer Supercell Oy for around $7.3 billion.
Kei Takahashi, senior analyst at Mizuho Securities Co., said such sales are designed to improve SoftBank’s balance sheet and prepare for investments.
“SoftBank has benefited from Mr. Arora’s knowledge and networks, focusing more resources on its investment business. Although he will remain an advisor, there is a question mark as to how much the company can rely on his resources,” Takahashi said.
In fact, Son himself admitted at the recent shareholders’ meeting that he was “not good at selling” stakes in investments, describing Arora as instrumental in the recent deals.
Shareholders approved Arora’s departure after SoftBank, in a rare last-minute move, dropped his name from the list of appointments needing to be endorsed, even as many expressed surprise at the timing of the announcement that came only a day before the annual meeting.
“When compared with Japanese investors, foreign investors place more importance on governance and seek clarity on long-term visions from companies,” said Shoichi Tsumuraya, an associate professor well-versed in investor relations and disclosure at Hitotsubashi University.
“Who comes next after Mr. Son is clearly one of the questions that they want to see answered,” he added.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.