Softbank is all in news today. And 66% of that news revolves around President Nikesh Arora. The biggest of them all though, is this — Nikesh Arora, the celebrated CEO successor to Softbank Chairman and current CEO Masayoshi Son, will be stepping down and leaving Softbank.
Reasons ? Unclear. But in an official statement, 58-year Son feels that he is still “a bit too young”and has the energy to continue as CEO for longer than expected. He had earlier announced a retirement at 60, post which Arora would have taken over the reigns. That however isn’t clearly going to happen now.
In an official statement, Son says,
I was thinking of handing over my job as CEO when I turn 60, but thought maybe I’m still a bit too young, and still have energy to continue.
Arora will continue to be an ‘advisor’ to Softbank. He said,
This will allow me to think about my next move.
Son further confirmed that Nikesh Arora won’t be re-elected to his position at Wednesday’s shareholder general meeting.
Nikesh and I have decided that he would move to an advisory role and continue to support SoftBank, while he zeroes in on his next challenge. He will continue to be friend of SoftBank, and I will have my hand on his shoulder.
The news however, comes as a bit of a surprise, considering that just yesterday Softbank released a statement, clearing Arora of all investor allegations regarding his current investment strategies and companies he has invested in. But as a different side to this coin, yesterday’s statement could have been a preparation for Arora’s departure. These could have been aligned to make sure Arora’s departure is a smooth affair, rather than the rocky and controversial one it could have been, without yesterday’s statement. Arora’s tweet mentions, that Son will continue as CEO for 5-10 years and that he “respects” this decision. Could be another reason for his departure.
Masa 2 continue 2 be CEO for 5-10 years, respect that. Learnt a lot. Clean chit from board after through review. Time for me to move on.
— Nikesh Arora (@nikesharora) June 21, 2016
Again, all of this is speculative.
Softbank, which Son founded in 1981 as a software distributor, first came into news with its acquisition of Vodafone Group PLC’s Japanese operations in 2006. The company then rebranded it using the SoftBank name and popularly transformed it into Japan’s third-largest mobile-phone service provider. A similar stint was tried with Sprint, which however hasn’t produced anything even close to desired results. As of March this year, Softbank has debts close to $107 Billion, with multiple divestments being done to make sure all of that money is paid.
In the release, Softbank further adds,
During his [Nikesh Arora’s] tenure, SBG invested in a set of ground-breaking growthstage companies in India like Snapdeal, Ola, Oyo, Grofers, Housing and extended its footprint in Asia successfully with the mobile e-commerce company Coupang in Korea and the ride-share player Grab in Southeast Asia.
All of those mentioned investments however — specially the Indian ones — aren’t doing too well. Leaving apart Ola (which too has been facing customer heat for the kind of archaic tech it deploys) and Snapdeal, Housing and Oyo have been a disaster of an investment for Softbank. And all of these were done under Arora’s reign. Housing has had a tumultuous ride ever since it got massive cash backing while Oyo — despite its initial glitterati — has failed to gain a retainable, loyal userbase. Both of them are now devising multiple ways to better cashflows and earn revenues.
Commenting on the decision, Nikesh said,
Helping Masa begin the transformation of SoftBank and sowing the early seeds has been a great experience. I have enjoyed working with Masa and the SoftBank team and I look forward to my next challenge. In the meantime I will continue to support SoftBank and our investee companies.