SoftBank steadies the ship with asset disposals
Softbank looked to be in trouble a few months ago. But asset disposals and progress at WeWork have improved the outlook. Matthew Partridge reports


Japanese technology conglomerate SoftBank Group Corporation is “exploring” either selling or floating British chip designer Arm Holdings, which it bought four years ago for $32bn, say Dana Cimilluca and Cara Lombardo in The Wall Street Journal. The review is at an “early stage”, so it is possible that SoftBank will “ultimately choose to do nothing”.
However, a sale would help it raise cash to “mollify” activist investor Elliott Management, which has been “agitating for changes at the company”. This money could be used to buy back its own shares, which trade at a “steep discount relative to net asset value”.
Good luck getting much cash for Arm Holdings, says Alec Macfarlane on Breakingviews. While SoftBank’s CEO, Masayoshi Son, once called Arm Holdings his “most important acquisition”, he may struggle to get buyers to feel the same way. Despite Arm Holdings splurging on research and development spending, making big acquisitions and going on a “hiring spree”, sales have failed to take off, growing by a “paltry” 2% in the fiscal year to March. Industry tracker IDC forecasts that shipments this year will decline by 12% amid Covid-19 disruptions, hinting at “further pain to come”. With rival chipmaker Intel trading at around three times historical sales, Arm Holdings could be worth as little as $6bn.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Still, even if getting rid of it proves more difficult than expected, SoftBank may not need to sell it, since the conglomerate has already managed to sell a lot of assets over the past few months, say Arash Massoudi and Kana Inagaki in the Financial Times.
SoftBank managed to raise $23.2bn last month from selling its stake in the company created by the merger of Sprint with T-Mobile. SoftBank has also sold down its holdings in Chinese ecommerce group Alibaba, which has hit “record after record” this year. As a result, it is already 90% of the way towards its goal of raising $41bn.
WeWork is working better
Even SoftBank’s most controversial investment, shared-workspace provider WeWork, is looking better these days, says Catherine Shu on TechCrunch. Thanks to financial and management issues that led to the resignation of founder Adam Neumann, WeWork’s valuation plunged from as much as $47bn at the beginning of 2019 to $2.9bn in March, leading to an overall $24bn loss for SoftBank. However, thanks to “aggressive cost-cutting measures”, which have reduced WeWork’s headcount from 14,000 to 5,600, and the sale of several of its businesses, WeWork now expects positive cash flow in 2021.
No wonder, then, that SoftBank’s shares “have more than doubled from their March low”, increasing Son’s personal fortune to $20bn, says Bloomberg. The bounce could endure. Earnings are set to recover from last quarter’s “record loss”, while short-sellers are under pressure to “cover losing bets”.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
HMRC confirms crypto ETN ISA rules
With crypto ETNs now technically available for UK retail investors, HMRC has confirmed they can be held in an ISA – but there’s a complication
-
Pensioners targeted in fine wine scams – the tactics to watch for
Wine has emerged as the latest lure in investment fraud, with pensioners being specifically targeted by scammers
-
Pierre-Édouard Stérin wants to make France great again
Conservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging markets
Opinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Pinewood Technologies: a drive for growth
Pinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'
Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with follies
The best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuation
AEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefully
Shares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?