Softbank's Masayoshi Son, who made huge investments to take the company from a small Japanese telecom firm to a global technology conglomerate, has decided to step back and appointed investments head Nikesh Arora as president and potential successor.
Son announced this in Tokyo yesterday evening. "This year will be a very important year of transition. Until now it was Japan's Softbank. From here, overseas will become main," said Son, adding that Arora will lead the global expansion strategy.
The move comes as Son and SoftBank are battling to make their 2013 acquisition of U.S. carrier Sprint Corp for more than $20 billion profitable. A sluggish Japanese economy, though, has forced the company to increasingly look overseas for growth.
Son, speaking at Softbank's earnings conference, said Arora was a strong candidate to lead the company in future. "Yes. He's 10 years younger than me, and he has more abilities than me," Son told reporters, when asked if Arora was a potential candidate to succeed him. "The last nine months I've spent with him have made me sure of that, but I'm not going to retire soon," Son said.
Arora was poached in July to run a newly created unit called SoftBank Internet and Media Inc, reporting directly to Son. He became one of the most powerful Google executives, and the highest paid in 2012, when he made $51 million in cash and stock. Arora will assume his new role on June 19.
SoftBank has been weighed down by the costs of trying to turn around Sprint, which has been in intense competition with larger U.S. rivals AT&T Inc and Verizon Communications Inc.
Sprint, in which SoftBank owns 80 percent, has undergone a long-haul revamping of its network, shedding thousands of jobs and triggering a mass exodus of subscribers.
SoftBank has made a string of other investments in recent years, including $250 million in privately-held Hollywood movie studio Legendary Entertainment, and $600 million in Travice Inc, the operator of Chinese taxi hailing app Kuaidi Dache.
As well as being the largest investor in Chinese e-commerce giant Alibaba Group Holding Ltd, SoftBank has plans to invest $10 billion in India's potentially huge but under-developed online retail market. Softbank has significantly ramped up its tech investments after Arora came onboard. It has invested over $2 billion in the last six months, including $627 million in Indian e-commerce company Snapdeal and $250 million in GrabTaxi, a taxi-hailing app.
"We expect more investments and acquisitions, even more so than now," Son said. "Going forward, the overseas market will be the main factor for SoftBank."
SoftBank posted a 9 percent fall in operating profit for the year ended March to 982.7 billion yen ($8.2 billion), hurt by the absence of one-time gains enjoyed the year before. That compared with its own forecast of 900 billion yen and was a shade better than the 980.87 billion average estimate of 20 analysts, according to Thomson Reuters StarMine. The company did not issue a forecast for the current fiscal year, saying it was difficult to provide estimates due to a large number of uncertain factors.
Softbank has also faced issues with its investment in Housing.com, whose chief executive Rahul Yadav had resigned couple of weeks ago after slamming his investors as 'intellectually incapable' in a scathing resignation letter. Softbank averted further damage by convincing Yadav to return, although his control over the company might have been reduced.
Analysts say Arora might also play a bigger role in Sprint, given his experience of heading T-Mobile's European operations before joining Google in 2004.