- SoftBank prioritizes investing in artificial intelligence over immediate share buybacks.
- CFO Yoshimitsu Goto highlights AI as crucial for future growth, deflecting specific comments on Elliott’s demands.
- Founder Masayoshi Son describes past investments as groundwork for a new AI-focused phase.
- Elliott advocates for buybacks to enhance shareholder returns and narrow asset value versus market cap gap.
- SoftBank’s current strategy aims to bolster UK-based chip designer Arm through AI acquisitions.
Main AI News:
SoftBank remains steadfast in its commitment to prioritize investments in artificial intelligence, dismissing immediate shareholder buybacks despite calls for a $15 billion capital return from activist investor Elliott. In an interview with the Financial Times, Yoshimitsu Goto, SoftBank’s CFO, emphasized that the company’s strengthened balance sheet should be leveraged for pursuing AI opportunities. Goto refrained from discussing specific dialogues with Elliott but highlighted the strategic importance of new investments that would underpin SoftBank Group’s future growth.
Elliott, which recently rebuilt a $2 billion stake in the company, has been urging SoftBank to initiate a buyback following the release of its first-quarter results in August. However, SoftBank’s founder, Masayoshi Son, expressed during the annual general meeting that previous investments, including significant Vision Fund bets like WeWork, were preparatory steps for a new phase focused on AI. Son downplayed the significance of share buybacks, referring to them as “small stuff” compared to the transformative potential of AI investments.
Elliott contends that buybacks could enhance return on equity and reduce the gap between SoftBank’s asset value and market capitalization. Despite this, Goto indicated that while buybacks are not ruled out in the medium term, current capital deployment priorities are clear. He stressed the need for SoftBank to embrace greater risk and pursue ambitious ventures, echoing Son’s directive to prioritize expansion over caution.
SoftBank’s strategy reflects a proactive stance, contrasting with its defensive posture during the pandemic. The company aims to bolster its flagship asset, UK-based chip designer Arm, through strategic AI acquisitions. Goto acknowledged investor support for this strategy amid a robust performance that has seen SoftBank’s shares rise over 75% this year to historic highs.
At the recent AGM, shareholder support for Son and Goto saw declines, influenced by concerns over return on equity performance. Despite these challenges, Goto emphasized that SoftBank’s unique shareholder structure, which includes significant retail bond holders and Son’s substantial stake, provides insulation against activist pressures common in other firms.
Looking ahead, SoftBank is prepared for substantial transactions, eyeing sectors such as power generation and data centers for potential investments. Goto underscored the company’s cautious approach to maintaining financial robustness through structured financing methods, aligning with Son’s strategic vision for sustainable growth.
Deal activity has already begun to accelerate, with SoftBank leading a significant investment in UK-based self-driving startup Wayve, marking a milestone as Europe’s largest AI deal to date. Talks are also underway regarding SoftBank’s potential acquisition of UK chip designer Graphcore, signaling continued aggressive expansion into AI-driven technologies.
Conclusion:
SoftBank’s strategic pivot towards prioritizing AI investments despite pressure from activist investor Elliott underscores a focused approach on future growth opportunities. By opting to strengthen its technological capabilities through strategic acquisitions rather than immediate shareholder returns, SoftBank aims to position itself competitively in the evolving tech landscape. This strategy not only reflects confidence in long-term value creation but also signals a proactive stance amid market expectations for innovation-driven growth strategies in technology sectors.
