SOFTBANK Group is staring at another quarter of bleak results, but for the first time on record, Masayoshi Son is going to miss the earnings call.

The founder and chief executive of the world’s largest tech investor bade farewell in November to the earnings presentations he’s led for decades, saying he was going to focus on taking chip designer Arm public.

The unenviable task of fielding investors’ concerns when the company announces its third-quarter results on Tuesday (Feb 7), will be the sole responsibility of Son’s top lieutenant, chief financial officer Yoshimitsu Goto.

“This is a negative given Masa’s management style,” MST Financial Senior Analyst David Gibson said. “He is in charge. What he says in terms of investments, etcetera happens. He calls the shots. If we do not know what he is thinking, then we run the risk of surprises, reducing the attractiveness of the shares.”

Son’s decision to shy away from the spotlight comes as investors and creditors are questioning SoftBank’s ability to navigate daunting investment waters.

The Vision Fund unit is expected to report a fourth straight quarter of losses, as markdowns in the value of investments in closely held companies outweigh gains from a recovery in the stock prices of publicly-traded companies in its portfolio. A pullback in the dollar also worked against the unit’s bottom line. Gibson estimates a loss of US$1 billion.

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New investments at the once high-flying Vision Funds, which minted dozens of unicorns in the past, have come to a virtual stop. Many of its portfolio companies are now busy cutting jobs or downsizing businesses in a post-pandemic downturn, and the odds of a blockbuster initial public offering (IPO) by a SoftBank portfolio firm are fading. The timing of Arm’s delayed listing remains uncertain.

The internal rates of return at the two flagship funds have continued to deteriorate in recent quarters. The first Vision Fund’s return is estimated to be close to zero as of September, compared with investment data firm Preqin’s average of about 22 per cent for the industry. The second Vision Fund is underwater, compared with the average gain of 24 per cent.

The bulk of SoftBank’s investments is tied to an opaque segment of the investment world, where valuations of closely held companies are dictated by a small group of investors. Lack of visibility on how SoftBank values these investments — which number in the hundreds — continues to worry shareholders. Gibson expects SoftBank will need to reset the value of its unlisted assets over the coming 12 months.

“A majority of the investments they’ve made is losing money, and whether that turns around or not over the long term we don’t know,” said Kirk Boodry, an analyst at Redex Research who publishes on Smartkarma.

The key for SoftBank lies with Arm’s IPO, which was once said could be valued at US$60 billion and hold the ability to jump start SoftBank’s stalled investment machine.

The Japanese conglomerate said in November it is delaying the planned IPO, which was initially scheduled for this fiscal year ending in March. The plan is now to list the chip design firm by December.

But an Arm listing would require improved capital markets, more certainty about the inflation outlook and interest rate stability, which will take more time, according to Gibson. He sees a listing more likely in 2024.

“If SoftBank shelves the IPO then this could be a major negative for the shares as the IPO would have driven over US$8 billion in funds into SoftBank and helped fund its future investments,” Gibson wrote in a note. “Without the Arm IPO the funds could be harder to get from asset-backed finance or asset sales.”

Redex’s Boodry was more optimistic, saying odds are improving for Arm to list this year. He reckons an Arm IPO would be positive for SoftBank “even without a valuation pop” and that anything that values Arm above US$37 billion would represent a good boost to earnings, given the US$32 billion acquisition price.

Any optimism hinges on a recovery in global equity markets, which have regained ground as bulls bet that the pace of rate hikes by the US Federal Reserve will slow. SoftBank’s own shares are up 12 per cent this year through Friday’s close.

The value of the first Vision Fund’s public holdings is also estimated to have increased, helped by gains in names such as Didi Global, Grab Holdings and Roivant Sciences. Didi jumped 73 per cent in the December quarter as its main apps returned to China’s biggest mobile stores. Grab climbed 22 per cent while healthcare firm Roivant rallied 148 per cent. For Vision Fund 2, a 49 per cent gain in AutoStore Holdings stood out.

Share buybacks and asset sales are also supporting SoftBank’s stock. The stock capped its best quarterly gain of 15 per cent in December thanks to an aggressive share buyback of more than US$4 billion.

In the September quarter, SoftBank booked a 5.4 trillion yen (S$54.3 billion) gain through the disposal of a chunk of its holding in Alibaba Group Holding. While it is unlikely that SoftBank would announce another round of massive asset sales, Redex’s Boodry says it’s possible for the company to divest portions of its stakes in startups like DoorDash and Coupang. “Those stocks have come down a lot from their highs. But anything they sell now is still a positive return,” he said.

Some analysts say Son’s risk appetite is a liability for SoftBank during downturns. They credit CFO Goto for supplying a steady hand and keeping the conglomerate safe in precarious times.

Unlike Son’s colourful metaphors describing tech’s promise, the most exciting thing Goto could say is that SoftBank paid down more debt, which would be a positive, said Boodry.

“In 2000, the tech market blew up and SoftBank fell about 90 per cent,” he said. “I think the biggest difference is that they didn’t have Goto back then.” BLOOMBERG