| To: Glenn Petersen who wrote (6014) | 9/14/2023 8:08:46 PM | | From: Glenn Petersen | | | | Arm climbs 25% in Nasdaq debut after pricing IPO at $51 a share
PUBLISHED THU, SEP 14 202312:11 PM EDT
Rohan Goswami @IN/ROHANGOSWAMICNBC/ @ROGOSWAMI
Kif Leswing @KIFLESWING
KEY POINTS
-- Arm Holdings has started trading on the Nasdaq under the ticker “ARM.”
-- The chip design company is valued at a steep premium relative to the rest of the semiconductor market.
-- SoftBank still holds about 90% of Arm’s stock.
Arm CEO Rene Haas and executives cheer as Softbank’s Arm, a chip design firm, holds an initial public offering at the Nasdaq MarketSite in New York, Sept. 14, 2023. / Brendan Mcdermid | Reuters
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Arm Holdings, the chip design company controlled by SoftBank, jumped nearly 25% during its first day of trading Thursday after selling shares at $51 a piece in its initial public offering.
At the open, Arm was valued at almost $60 billion. The company, trading under ticker symbol “ARM,” sold about 95.5 million shares. SoftBank, which took the company private in 2016, controls about 90% of shares outstanding.
On Wednesday, Arm priced shares at the upper end of its expected range. On Thursday, the stock first traded at $56.10 and ended the day at $63.59.
It’s a hefty premium for the British chip company. At a $60 billion valuation, Arm’s price-to-earnings multiple would be over 110 based on the most recent fiscal year profit. That’s comparable to Nvidia’s valuation, which trades at 108 times earnings, but without Nvidia’s 170% growth forecast for the current quarter.
Arm Chief Financial Officer Jason Child told CNBC in an interview that the company is focusing on royalty growth and providing products to its customers that cost and do more.
Many of Arm’s royalties come from products released decades ago. About half the company’s royalty revenue, which totaled $1.68 billion in 2022, comes from products released between 1990 and 2012.
“As a CFO, it’s one of the better business models I’ve seen. I joke sometimes that those older products are like the Beatles catalog, they just keep delivering royalties. Some of those products are three decades old,” Child said.
In a presentation to investors, Arm said it expects the total market for its chip designs to be worth about $250 billion by 2025, including growth in chip designs for data centers and cars. Arm’s revenue in its fiscal year that ended in March slipped less than 1% from the prior year to $2.68 billion.
Arm’s architecture is used in nearly every smartphone chip and outlines how a central processor works at its most basic level, such as doing arithmetic or accessing computer memory.
Child said the company sold $735 million in shares to a group of strategic investors comprising Apple, Google, Nvidia, Samsung, AMD, Intel, Cadence, Synopsis, Samsung and Taiwan Semiconductor Manufacturing Company. It’s a testament to Arm’s influence among chip companies, which rely on Arm’s technology to design and build their own chips.
“There was interest to buy more than what was indicated, but we wanted to make sure we had a diverse set of shareholders,” Child said.
In an interview with CNBC on Thursday, SoftBank CEO Masayoshi Son emphasized how Arm’s technology is used in artificial intelligence chips, as he seeks to tie the firm to the recent boom in AI and machine learning. He also said he wanted to keep the company’s remaining Arm stake as long as possible.
The debut could kick open the market for technology IPOs, which have been paused for nearly two years. It’s the biggest technology offering of 2023.
Arm IPO: (ARM) starts trading on the Nasdaq in win for SoftBank (cnbc.com) |
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| From: Glenn Petersen | 11/1/2023 5:09:18 AM | | | | | | WeWork plans to file for bankruptcy as early as next week, source says
Reuters
November 1, 20232:27 AM CDT
Updated 2 hours ago
Oct 31 (Reuters) - WeWork (WE.N) plans to file for bankruptcy as early as next week, a source familiar with the matter said on Tuesday, as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses.
Shares of the flexible workspace provider fell 32% in extended trading after the Wall Street Journal first reported the news. They have fallen roughly 96% this year.
New York-based WeWork is considering filing a Chapter 11 petition in New Jersey, the WSJ reported, citing people familiar with the matter
WeWork declined to comment.
Earlier on Tuesday, WeWork said it had entered into an agreement with creditors for temporary postponement of payments for some of its debt, with the grace period nearing an end.
The company had net long-term debt of $2.9 billion as of June end and more than $13 billion in long-term leases, at a time when rising borrowing costs are hurting the commercial real estate sector.
WeWork's filing for bankruptcy would mark a stunning reversal of fortune for the company that was privately valued at $47 billion in 2019 and a black spot for investor SoftBank that sunk billions.
The company has been in turmoil ever since its plans to go public in 2019 imploded following investors' skepticism over its business model of taking long-term leases and renting them for the short term and worries over its hefty losses.
WeWork's woes did not abate in subsequent years. It finally managed to go public in 2021 at a much-reduced valuation. Its major backer, Japanese conglomerate SoftBank, sunk tens of billions to prop up the startup, but the company has continued to lose money.
WeWork raised "substantial doubt" about its ability to continue operations in August, with numerous top executives, including CEO Sandeep Mathrani, departing this year.
Reporting by Anirban Sen in New York, Manas Mishra and Manya Saini in Bengaluru; Editing by Shailesh Kuber and Anil D'Silva
WeWork plans to file for bankruptcy as early as next week, source says | Reuters |
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| From: Glenn Petersen | 11/9/2023 5:46:10 AM | | | | | | SoftBank posts $6.2 billion quarterly loss as WeWork collapse, tech slump drag bottom line
PUBLISHED THU, NOV 9 20231:15 AM EST
UPDATED AN HOUR AGO
Arjun Kharpal @ARJUNKHARPAL
CNBC.com
KEY POINTS
- SoftBank posted an investment gain on its Vision Fund in the fiscal second quarter but booked another quarterly loss.
- The company said the Vision Fund gain was due to a gain arising from the sale of shares in chipmaker Arm to a subsidiary of SoftBank.
- This offset a decline in the value of companies SoftBank is invested in such as Chinese artificial intelligence firm SenseTime.
SoftBank Founder Masayoshi Son is pictured here in 2019 during an earnings presentation.
Tomohiro Ohsumi | Getty Images
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SoftBank posted an investment gain on its Vision Fund in the fiscal second quarter but booked another quarterly loss.
Here’s how SoftBank did in the September quarter against LSEG estimates:
- Net sales: 1.67 trillion Japanese yen ($11 billion) versus 1.6 trillion yen expected
- Net loss: 931.1 billion yen ($6.2 billion) versus an expected loss of 114.1 billion yen
For the first half of SoftBank’s fiscal year, it posted a 1.41 trillion loss ($9.3 billion). This compares to a 3 trillion yen profit in the same period last year. SoftBank said a weaker yen hit the company since it has a lot of U.S.-dollar denominated liabilities.
SoftBank’s Vision Fund posted an investment gain of 21.3 billion yen, its second straight quarter of gains. The company said this was due to a gain arising from the sale of shares in chip designer Arm to a subsidiary of SoftBank.
This offset a decline in the value of companies SoftBank is invested in, such as Chinese artificial intelligence firm SenseTime.
“The environment is still tough … but we believe we have hit a bottom and are making good moves towards positive figures,” SoftBank Chief Financial Officer Yoshimitsu Goto said on Thursday during an earnings presentation.
WeWork bankcruptcy hit
However, the overall SoftBank Vision Fund segment posted a pre-tax loss of 258.86 billion yen.
SoftBank recorded a loss of 234.4 billion yen for the half-year period related to the investment and financial support provided to WeWork, which filed for Chapter 11 bankruptcy protection in the U.S. this week. SoftBank was one of the biggest backers of the co-working space firm, which tried and failed to go public five years ago.
Critics of SoftBank’s investment strategy point toward WeWork as an example of a lack of discipline, at times, from the Vision Fund. SoftBank’s high-profile founder Masayoshi Son once said WeWork is at the forefront of a “revolution” in the way people work.
Goto addressed the WeWork bankruptcy and said SoftBank should learn lessons from it.
“First of all, I am very story to hear that. As a company we need to accept this reality and also need to learn the lesson from this for our future investment activity,” Goto said.
SoftBank’s flagship tech investment arm had a rough time in the fiscal year that ended in March this year, posting a record loss of around $32 billion. A slump in tech stock prices and the souring of some of SoftBank’s bets in China were to blame.
In the June quarter, the Vision Fund posted its first investment gain in five consecutive quarters, signalling early signs of growth again. This has coincided with recoveries in the prices of technology stocks.
Last year, Son noted the firm would go into “defense” mode, slowing the pace of its investment and being more cautious. In June, Son flagged a shift into “offense” mode, touting his excitement around the potential of artificial intelligence technology.
“We are investing in AI and that’s the main strategy for our company,” Goto said.
Son, who used to lead SoftBank’s earnings presentations with colorful presentations, has not been present for several quarters. But Son has been “devoting himself and involved in the discussion, how and what is going to be the changes in people’s lives from the AI revolution,” Goto said.
The CFO added that SoftBank wants to be a front runner of the AI revolution.
Chip designer Arm went public in the U.S during SoftBank’s fiscal second quarter. The company acquired Arm in 2016 for around $32 billion at the time. The initial public offering of Arm valued the company at over $50 billion.
Arm on Wednesday reported its first set of results since its IPO, posting an annual rise in revenue for the September quarter. However, the semiconductor firm gave guidance for the December quarter that disappointed investors, sending its shares lower in after-hours trade in the U.S.
Correction: The headline of this article has been updated to reflect a $6.2 billion quarterly loss.
SoftBank earnings Q2 FY 2023 (cnbc.com) |
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| To: Glenn Petersen who wrote (6017) | 12/27/2023 11:05:30 AM | | From: Glenn Petersen | | | | SoftBank gets $7.6 billion T-Mobile stake windfall, shares soar
By Sam Nussey
Reuters
December 26, 20239:33 PM CST
Updated 7 hours ago
TOKYO, Dec 27 (Reuters) - SoftBank Group Corp (9984.T) said it would receive shares in telco T-Mobile US (TMUS.O) worth some $7.59 billion at no additional cost, driving the Japanese conglomerate's shares up 5%.
Masayoshi Son's conglomerate said late on Tuesday it had told T-Mobile US to issue 48.75 million shares in common stock to it after conditions set out in an agreement made as part of the merger of SoftBank's U.S. telco Sprint and T-Mobile were met.
The transaction bolsters the listed assets in SoftBank's portfolio, doubling its T-Mobile US stake to 7.64% from 3.75% currently, following the blockbuster listing of chip designer Arm in September.
"This increases the proportion of listed, measurable equity in hand on (SoftBank Group's) balance sheet, and, even better, proportions of marginable equity relative to indebtedness," Macquarie analyst Paul Golding wrote in a client note.
SoftBank's shares were on track for their biggest gain in more than a month. The conglomerate has risen only around 14% year-to-date, compared with an almost 30% rise in the benchmark index (.N225). The group trades at a discount of around 45.5% to the value of its assets, according to Macquarie calculations.
Son has been a leading investor in late stage startups but has suffered a series of reversals including the bankruptcy of office-sharing firm WeWork, which was once the most valuable U.S. startup.
The T-Mobile US transaction bumps SoftBank's internal rate of return (IRR) on its Sprint investment to 25.5%.
Other positives for the company include the recent rally in Arm's shares, which closed on Tuesday around 44% above the initial public offering price.
Reporting by Sam Nussey; Editing by Tom Hogue and Muralikumar Anantharaman
Our Standards: The Thomson Reuters Trust Principles.
SoftBank gets $7.6 billion T-Mobile stake windfall, shares soar | Reuters |
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