'I shut my eyes,' SoftBank CEO Masayoshi Son says after losing more than $4.7 billion on WeWork - Business Insider

SoftBank CEO Masayoshi SonKim Kyung-Hoon/Reuters

• SoftBank lost at least $4.7 billion by investing in WeWork after the shared-workspace group's IPO collapsed and its valuation plunged from $47 billion in January to below $10 billion.
• "My own investment judgment was really bad. I regret it in many ways," CEO Masayoshi Son said at a news conference, according to the Wall Street Journal. 
• SoftBank reduced its overall valuation of WeWork to $7.8 billion.
• Watch SoftBank trade live.

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SoftBank lost at least $4.7 billion by investing in WeWork after the shared-workspace group's IPO collapsed and its valuation plunged from $47 billion in January to below $10 billion.

In an earnings filing on Wednesday, the Japanese conglomerate slashed its estimated valuation of the embattled startup to $7.8 billion as of the end of September.

The WeWork writedown fueled an $8.9 billion operating loss at SoftBank's Vision Fund and Delta Fund in the second quarter — a sharp swing from their $3.6 billion profit in the same period last year. The upshot was an overall operating loss of $6.5 billion.

'I regret it'

SoftBank CEO Masayoshi Son shouldered the blame for the weak results, according to the Wall Street Journal. "My own investment judgment was really bad. I regret it in many ways," he said at a news conference.

Son also admitted to overlooking the controversial behavior of WeWork cofounder and former CEO Adam Neumann, who leased properties to his company, charged it nearly $6 million for the "We" trademark, and raised $700 million by selling and borrowing against company stock.

"I shut my eyes to a lot of his negative aspects," Son said, according to the Journal.

SoftBank agreed a $9.5 billion rescue package with WeWork last month in exchange for an 80% stake in the ailing business. The deal includes $1.5 billion in warrants, up to $3 billion in stock purchases, and $5 billion in debt financing. The company didn't assess the financial impact of the funding agreement in its latest earnings.

SoftBank has invested a total of $10.3 billion in WeWork, comprising $6 billion from a wholly owned subsidiary and $4.3 billion from its Vision Fund. It cut the estimated value of the subsidiary's stake by $4.7 billion to $1.3 billion, and more than halved the value of the Vision Fund's investment to $2.1 billion.

Son told colleagues "we created a monster" in WeWork by investing billions only to end up bailing it out, the Financial Times reported.

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https://www.businessinsider.com/softbank-lost-at-least-47-billion-wework-valuation-2019-11

2019-11-06 12:18:41Z
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CVS to close 22 drugstores next year - CNBC

Pedestrians walk by a CVS store on November in San Francisco, California.

Justin Sullivan | Getty Images

CVS Health will close 22 "underperforming" drugstores early next year in addition to the 46 stores it shuttered earlier this year, the company said Wednesday in a regulatory filing.

Details of the locations of the stores weren't immediately disclosed. The company recorded a $96 million impairment charge on its third-quarter earnings related to the 22 stores. It recorded a $135 million charge in the first quarter related to the 46 stores it closed during the second quarter.

"We believe these decisions will generate enhanced longer term performance," CVS Chief Financial Officer Eva Boratto told analysts Wednesday on a call reviewing third-quarter results. "Our real estate footprint remained very productive, and we will look for opportunities to further improve the performance in our portfolio."

Drugstores are under threat as consumers buy more pharmacy items online and new competitors sell prescription drugs online. Rival Walgreens earlier this year said it would close 200 stores. Amid upheaval in the industry, CVS executives have said they do not expect "meaningful" store closures.

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https://www.cnbc.com/2019/11/06/cvs-health-to-close-22-drugstores-next-year.html

2019-11-06 12:55:00Z
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CVS Health third-quarter profit rises 10% on Aetna sales - CNBC

Pedestrians pass in front of a CVS location in New York.

Scott Mlyn | CNBC

CVS Health reported third-quarter earnings that beat Wall Street's estimates as its Aetna insurance business helped juice the company's profit by 10%.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $1.84, adjusted, vs. $1.77 expected
• Revenue: $63.81 billion vs. $62.99 billion expected

CVS reported third-quarter net income of $1.53 billion, or $1.17 per share, up 10% from $1.39 billion, or $1.36 per share a year earlier. Excluding one-time items, such as a charge related to closing stores, CVS earned $1.84 per share, above the $1.77 per share expected by analysts surveyed by Refinitiv.

Revenue reached $64.81 billion, a sharp increase from the year earlier, before CVS acquired health insurer Aetna last November.

"As we approach the first anniversary of the Aetna acquisition, we are increasingly confident in the strength of our broad and differentiated assets as a combined company and our ability to deliver compelling value to our customers and the communities we serve," CVS CEO Larry Merlo said in a statement.

The company raised its full-year adjusted earnings forecast to between $6.97 to $7.05 per share from the previously guided range of $6.89 to $7 per share.

Shares of CVS rose by more than 2% Tuesday in premarket trading.

Read the complete earnings release here.

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https://www.cnbc.com/2019/11/06/cvs-health-earnings-q3-2019.html

2019-11-06 11:58:13Z
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Tesla secures battery cell supply deal with CATL, report says - Electrek

Tesla has reportedly secured a battery supply deal with CATL, China’s biggest battery manufacturer, to supply cells for Gigafactory 3 in Shanghai and potentially expand to other production facilities.

As of now, Panasonic is the only approved battery cell supplier for Tesla’s vehicles, but things are changing fast.

Since Tesla’s inception, Panasonic has always been the automaker’s sole battery suppliers for vehicles with the very small exception of a short-lived Tesla Roadster 3.0 battery replacement program.

Panasonic made cells in Japan and exported them to California for Tesla’s Model S and Model X programs, while the two companies partnered to make the cells for Model 3 at Gigfactory 1 in Nevada.

Over the last few years, Tesla started using battery cells from Samsung SDI and LG Chem for its stationary energy storage products, but Panasonic always had the exclusive contract to supply the automaker with battery cells for its electric vehicles.

Now it’s apparently about to change.

Earlier this year, we heard that Tesla made a battery supply deal with LG Chem for the Model 3 produced at Gigafactory 3 and now it looks like they will split the capacity with CATL.

We have been hearing since March that Tesla was in talks with CATL, but Bloomberg is now reporting that the two companies have “reached a preliminary agreement.”

Bloomberg reports that the official agreement is not certain yet and it is not expected to go through until “mid-2020”:

“Following months of negotiations, the companies clinched a non-binding deal after Tesla Chief Executive Officer Elon Musk traveled to Shanghai in late August and met with CATL Chairman Zeng Yuqun for about 40 minutes, according to the people, who asked not to be named discussing private deliberations. Though a final agreement is expected to be signed by mid 2020, there is no guarantee that will happen, the people said.”

The ‘preliminary agreement’ is for battery cells to be installed in Model 3 vehicles to be built at Gigafactory 3 in Shanghai, but they are reportedly also “separate discussions underway on a potential global supply contract.”

CATL has been expanding its reach lately and announced several new battery factories to support major automakers.

The Chinese company signed a supply contract with SAAB successor National Electric Vehicle Sweden (NEVS) in order to enable the production of hundreds of thousands of all-electric cars per year.

BMW also signed a $1 billion battery supply contract with them to support their future EV production.

They have also secured a battery supply agreement with Honda for about 1 million electric vehicles.

CATL reportedly has a current annual production of 17.5 GWh and they are planning a new factory with a capacity of 24 GWh to come online as soon as next year.

Electrek’s Take

It’s interesting that in the space of a few months to a year, Tesla could go from a single battery cell supplier for its cars to having 3 and even likely making its own cells.

I still think that Tesla is planning to move into the battery cell manufacturing space in a big way next year, but it makes sense for the company to still build a solid supply chain with other suppliers.

Tesla is going to need an incredible amount of battery cells over the next few years and while I think that long term most of those cells are going to be built internally, I think they will still be buying billions of dollars worth of battery cells in the next few years.

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https://electrek.co/2019/11/06/tesla-secures-battery-supply-deal-catl-report/

2019-11-06 10:01:00Z
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Tesla going all out in China - Seeking Alpha

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Tesla going all out in China  Seeking AlphaView full coverage on Google News
https://seekingalpha.com/news/3515072-tesla-going-china

2019-11-06 08:17:00Z
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SoftBank Takes a Financial Hit as Its WeWork Bet Sours - The New York Times

TOKYO — SoftBank Group of Japan on Wednesday said it took a multibillion-dollar write-down related to its stakes in WeWork and Uber, two flashy technology companies that have become the poster children for the excesses of start-up culture.

SoftBank Group is the world’s largest tech investor, and it has used its $100 billion Vision Fund — backed with its own money as well as major stakes from Saudi Arabia’s Public Investment Fund and others — to become a kingmaker in the space by placing major bets on companies it believes have the potential to dominate entire industries.

But the company, and its chief executive, Masayoshi Son, have come under increasing pressure to rein in their stable of potential unicorns following the spectacular implosion of the initial public offering of WeWork, the tech-adjacent American real estate company, in late September.

On Wednesday, SoftBank said its profits for the six months that ended in September totaled 421 billion yen, or nearly $3.9 billion, about half the level of the same period a year ago. The figures imply SoftBank lost more than $6.4 billion in the most recent three-month period.

SoftBank cited a nearly $4.6 billion write-down in the value of its investment in WeWork, plus write-downs in other investments, including Uber, the American ride-hailing company.

SoftBank also owns Yahoo Japan, the chip design firm ARM, and the phone carrier Sprint in the United States.

But WeWork’s fall had the biggest impact on the Japanese company’s results. WeWork’s $47 billion valuation plummeted virtually overnight after its effort to sell shares to the public revealed deep governance issues, including questionable financial arrangements involving Adam Neumann, its leader and founder. SoftBank now values WeWork at $7.8 billion. Mr. Neumann resigned as the company’s chief executive at the end of September.

SoftBank Group bet big on Mr. Neumann’s vision even as cracks had begun to appear. While its partners in Vision Fund balked at throwing more money at the loss-making WeWork, Mr. Son’s company continued pouring funds into the venture, eventually investing $10.5 billion in the tech firm ahead of its planned offering.

The meltdown has forced SoftBank Group to pump an additional $9.5 billion into the company, leaving it with an 80 percent stake but no majority voting rights. Mr. Neumann walked away with more than a billion-dollar payout.

The WeWork fiasco has increased scrutiny of Mr. Son’s role in shaping the Vision Fund’s investment portfolio. The notoriously exuberant founder is famous for making snap decisions about companies based on intuition as much as overall strategy.

The missteps at WeWork have shaken investors’ confidence in Mr. Son, according to Mitsunobu Tsuruo, an analyst at Citigroup Global Markets Japan.

“He’s supposed to be a good judge for picking winning entrepreneurs, but Mr. Neumann was not the case,” he said, adding that Mr. Son would need to convince his shareholders that their interests will not be compromised by Softbank’s exposure to WeWork.

In some cases, Mr. Son’s bets have paid off spectacularly. An early gamble on Alibaba, the Chinese e-commerce company, grew to more than $100 billion. But other investments have not fared as well. Large stakes in Uber and Slack have begun to look more nearsighted than visionary as their share prices have fallen in the months following their public offerings.

WeWork’s collapse comes as Mr. Son is trying to raise funds for a second $100 billion-plus fund aimed at making investments in artificial intelligence, which SoftBank announced in July. The company planned to finance the fund with $38 billion of its own money and said it expected backing from some of the tech industry’s top names, including Apple and Microsoft, as well as several major Japanese financial institutions.

At the time, it seemed that money would likely finance a strategy similar to the one Mr. Son has pursued with the first fund: pumping so much money into his chosen companies that they overwhelm their rivals with their sheer financial bulk, allowing them to establish near monopolies in key industries.

Critics of the strategy say it has undermined financial discipline at the companies that benefit from the fund’s largess, and the experience of companies like Uber — which spent billions on buying market share but has yet to turn a profit — has given investors second thoughts about that model.

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https://www.nytimes.com/2019/11/06/business/softbank-loss-wework.html

2019-11-06 07:12:00Z
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SoftBank Reveals $6.5 Billion Loss From Uber, WeWork Turmoil - Bloomberg

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SoftBank Reveals $6.5 Billion Loss From Uber, WeWork Turmoil  BloombergView full coverage on Google News
https://www.bloomberg.com/news/articles/2019-11-06/softbank-posts-6-5-billion-operating-loss-on-wework-and-uber

2019-11-06 06:05:00Z
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