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> Mr. Son pulled his conglomerate back from the void with a sharp and surprising strategy shift, selling off holdings that have been central to his investment a
by AnonC 6y ago
> Mr. Son pulled his conglomerate back from the void with a sharp and surprising strategy shift, selling off holdings that have been central to his investment and operating blueprint, and buying back shares.
I somehow get the feeling that SoftBank and Masayoshi Son aren’t great at investing and have managed to throw a whole lot of money aggressively into ventures that any common person would doubt about returns, scaling, etc. At the same time, it has sold off what could continue to be profitable, like ARM Holdings.
I honestly don’t understand SoftBank’s business model and how it expects to generate great returns. It doesn’t even look close to the stock market advice of “if you get 6 calls out of 10 right, that’s great.” It looks like SoftBank has a lot of money (or had). Business sense and agility? Not so much.
- ckastner 6y ago> I somehow get the feeling that SoftBank and Masayoshi Son aren’t great at investing and have managed to throw a whole lot of money aggressively into ventures that any common person would doubt about returns, scaling, etc. At the same time, it has sold off what could continue to be profitable, like ARM Holdings. Case in point: they bought ARM for $32B in 2016 and recently sold it for $41B. The S&P500 performed better over the same time period. (I don't think they sold at a bad price; I think they massively overpaid for buying it. ARM was a prime takeover target back then and you could see that in its valuation, and SoftBank paid a hefty premium even on that.)
- octoberfranklin 6y ago> I honestly don’t understand SoftBank’s business model and how it expects to generate great returns. Simple: lose money hand-over-fist, forcing your competitors to do the same. Continue this until they've all bled to death. Then declare a monopoly, jack up prices, and make back what you've lost. This is the optimal strategy if you have more capital than your opponents. It is quite effective.
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- josu 6y agoIt sure works for sectors with a high entry cost. It doesn't work so well when entry barriers are almost non-existent.
- itsoktocry 6y ago>Then declare a monopoly, jack up prices, and make back what you've lost. I often see people posting some variation of this theory. Can anyone point to real-life example of this happening? Where competitors were driven out of business only to have the perpetrator "jack up prices"? I'm not a believer that the market is perfect, but I have more faith in it than that. From my view, it looks like most companies who attempt this strategy end up going out of business themselves.
- otoburb 6y agoMylan and epinephrene in the US comes to mind as the most egregious[1]. The reason we don't see as many clear examples is because, as you noted, reputational effects will usually influence market leaders to try to generate more profit without catching the ire of powerful anti-competitive bodies. In Canada, our band of oligopolies is well known (telecoms and banks primarily)[2], and past and future attempts[3] are difficult to implment due to our low population density[4]. [1] https://www.goodrx.com/blog/epipen-price-change-since-mylan-released-generic-epinephrine/ https://www.goodrx.com/blog/epipen-price-change-since-mylan-... [2] https://this.org/2018/11/30/canada-has-an-oligopoly-problem-and-we-need-to-fix-it/ https://this.org/2018/11/30/canada-has-an-oligopoly-problem-... [3] https://financialpost.com/opinion/the-crtcs-proposals-for-wireless-competition-will-hurt-the-sector-not-help-it https://financialpost.com/opinion/the-crtcs-proposals-for-wi... [4] https://www.statista.com/statistics/271206/population-density-in-canada/ https://www.statista.com/statistics/271206/population-densit...