SoftBank’s big profit report hints at potential trouble ahead.

SoftBank’s big profit report hints at potential trouble ahead.

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Credit…Yuki Iwamura/Agence France-Presse — Getty Images

TOKYO — SoftBank, the Japanese conglomerate that has become a major investor in the technology space, on Tuesday reported a profit of 762 billion yen, or $6.9 billion, for the three months that ended on June 30.

That would be an impressive number for just about any company. But SoftBank could face uncertainty ahead, as technology investors focused on Chinese internet firms absorb the impact of Beijing’s tightening regulatory grip.

By the numbers, SoftBank’s profit marked a nearly 40 percent drop from the year-earlier period. That year-ago period, however, included a nearly $6.7 billion gain from the loss of its control of Sprint, the American telecom company that the Japanese firm sold to T-Mobile last year.

In SoftBank’s most high-profile businesses these days — investing in other companies — it reported more than $11 billion in gains, compared with $8.9 billion a year earlier. SoftBank’s Vision Fund, the investment vehicle it controls, has become a technology heavyweight, giving a boost to the company’s bottom line.

This spring, SoftBank announced the highest quarterly earnings in history for a Japanese-listed company: $17 billion for the three-month period that ended in March.

But with SoftBank’s successes have come a string of failures, particularly in 2019 with the spectacular implosion of the workspace start-up WeWork, which cost the company billions of dollars and tarnished the reputation of its founder and impresario, Masayoshi Son.

In 2019, SoftBank began a second iteration of its Vision Fund with tens of billions of dollars of its own money after the WeWork debacle scared off other potential investors.

Last year, under pressure from outside investors, the company began a $23 billion stock buyback program, financed partly with loans against its holdings in the Chinese e-commerce giant Alibaba.

The purchases helped send its stock price to record levels. But they didn’t last: The company’s shares have fallen more than 35 percent since peaking in March.

In recent months, SoftBank’s shares have come under new pressure from investors worried about its exposure to Chinese tech companies that are facing tougher regulatory scrutiny at home. Chinese regulators have tightened their grip on an industry that flourished under light regulation in previous years. In April, regulators fined Alibaba $2.8 billion.

SoftBank said on Tuesday that it lost nearly $1 billion from financial derivatives backed by Alibaba shares. It could take another hit in the next quarter from its investments in the Chinese logistics firm Full Truck Alliance and the Chinese ride-hailing giant Didi, which has seen its shares drop after it came under its own scrutiny from Beijing.

The rise in virus cases has tempered forecasts for a swift recovery in business travel.
Credit…Dan Kitwood/Getty Images

Leisure travel roared back this summer, but the airline and hotel industries long depended on business travel for a substantial portion of their revenues because those customers, who often made their plans at the last minute, could be counted on to pay more for seats and rooms. Now that the pandemic has upended the notion that travel is necessary to do business, the question is how much it will resume, even when Covid is brought under control.

And now the spread of the Delta variant of the coronavirus is throwing a yet another wrench into businesses’ plans, Jane L. Levere writes in The New York Times. A pressing question is whether the spike in cases will be brief or more long-lived.

Even the experts who were most optimistic about the prospects for business travel a month or so ago have begun to temper their forecasts. The quick change was captured by a survey of 1,200 American travelers that Destination Analysts, a market research firm in San Francisco, conducted from July 21 to 23. Among business travelers, it found, nearly 25 percent expected the “coronavirus situation” to worsen in the next month, a jump from under 14 percent two weeks earlier.

The U.S. Travel Association said in late July that it continued to forecast “a modest return of business travel over the coming months, so the increase in cases has not materially affected our view.” It said it now expected that business travel would “only achieve 50 percent of 2019 levels in the fourth quarter of 2021.”

Travel experts nevertheless remain optimistic that business travel will pick up substantially later this year and early in 2022. Or as Christopher J. Nassetta, the president and chief executive of Hilton, put it on an earnings call last month, “People have to meet.”

Scott Graf, global president of BCD Meetings & Events, said that in light of the spread of the Delta variant, “we’ll likely see some cancellations or certainly meetings being pushed out by weeks or months.”

“I may be optimistic,” he added, “but it is my hope that vaccination progress will increase dramatically over the next 60 to 90 days and that the fourth quarter and early 2022 will still be quite strong.”

Companies are figuring out their own guidelines, leaving workers to navigate a patchwork of disparate policies.
Credit…Jeenah Moon for The New York Times

As some workplaces have begun determining how to safely bring employees back to the office, the choice of getting a coronavirus vaccine is becoming increasingly public, Sydney Ember and Coral Murphy Marcos report in The New York Times.

The vaccines have been shown to be vigorously effective against severe illness and death after infection, including the highly contagious Delta variant, and public health officials, doctors and political leaders are urging inoculation. The Kaiser Family Foundation reported in late July that more than 90 percent of Covid-19 cases, hospitalizations and deaths have occurred among people who are unvaccinated or not yet fully vaccinated.

“The more people who are out there without the vaccine, the more Covid will spread,” said Luisa Borrell, distinguished professor at the CUNY Graduate School of Public Health & Health Policy.

A growing number of companies are mandating vaccines as a condition of employment, leaving unvaccinated workers at risk of being fired. CNN, which has required full vaccinations for all employees working in its offices and in the field, said on Thursday that it had fired three people who went into the office unvaccinated. Many others are adopting less sweeping — but perhaps more conspicuous — approaches, including mask mandates for unvaccinated workers or the requirement that they work remotely.

Tension between the vaccinated and the unvaccinated has simmered since the shots became more widely available in the spring. But with the virus’s resurgence has come mounting frustration among vaccinated Americans toward the unvaccinated, making some unvaccinated workers especially circumspect about revealing themselves.


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