SoftBank Group Corp (SFTBY) CEO Masayoshi Son on Q3 2019 Results - Earnings Call Transcript

Feb. 06, 2019 3:01 PM ETSoftBank Group Corp. (SFTBY)
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SoftBank Group Corp (OTCPK:SFTBY) Q3 2019 Earnings Conference Call February 6, 2019 2:00 AM ET

Company Participants

Masayoshi Son - Founder, Chairman & CEO

Conference Call Participants

Naotaka Owada - Nikkei Computer

Minoru Satake - Nikkei Newspaper

Mayumi Negishi - Wall Street Journal

Kosuke Shimizu - Nikkei Automotive

Takahiko Hyuga - Bloomberg


So thank you very much for waiting, ladies and gentlemen. Now we would like to start of the SoftBank Group Corp. earnings results announcement for the 9-month period ended December 31, 2018. First of all, I would like to introduce today's participants. On the front, from left, we have Masayoshi Son, Chairman and CEO of SoftBank Group Corp.; Yoshimitsu Goto, Senior Executive Corporate Officer and Head of Finance Unit, and CFO; Kazuko Kimiwada, Executive Corporate Officer and Head of Accounting Unit. This meeting is live broadcast over the Internet and can be heard by telephone.

Now I would like to invite Mr. Son, Chairman and CEO, to present to you the earnings results and business overview. Mr. Son, please.

Masayoshi Son

I am Son. Thank you very much for joining today. In the world, especially for the nature world, there are variety of things, some complicated things, strange things, some miracle things happening in the world. And if you put it into the mathematic equation, what that can be expressed for each one of the phenomenon? So there is one quite interesting photo that I would like to share with you here. Can you tell what this equation express? Very complicated, too much things on the screen, so you cannot really tell what it is saying. I understand that -- I don't understand that neither. This person is not that. Very complicated things he can put in into very simple way and also put it in one aspect, so he's a genius. For example, this is one of the equation he expressed: E equals MC^2. This is an energy principle. So this express the mass energy equivalent, and ordinary people don't really come to that notice. However, he's not the person that who take the situation in complicated way but rather put it into simple way so that he would be able to put it into the one simple equation.

Now today I would like to do the same. Very complicated SoftBank. I would like it to put it into this one equation to express SoftBank Group. Many experts, many analyst, professionals, journalists here always complains that complication of the SoftBank Group's balance sheet. What is SoftBank? What is the real picture of SoftBank? It's too complicated. You cannot really tell. That's mostly asked or mostly complained. And now that we have several hundreds of companies in the group, and among these companies there are subsidiaries and subsidiaries' subsidiaries are also in the group, so that there are so many group companies in our group and some of them needs to be consolidated. If we invest more than 50%, and accounting-wise, we put it into our consolidated financial report. And this express then that will make you even more complicated to understand our picture. Looks like a big disc.

So what's happening in this company? That's the question that I often hear. So the meanings of this equation is something that I would like to share in the following pages. So first that I would like to share with you on this equation, this is what I would like to share that -- as one way of explaining SoftBank. For those who can get what this mean, I think you are the pro for the SoftBank. You know us very well, so I really admire and respect that.

Now consolidated results. And I would like to present our numbers, 5% increase in net sales and also 62% increase in EBIT and 52% increase in net income year-on-year basis. So EBIT and net income, even those numbers -- actually, I think that these almost meaningless, actually this important indicator, but this is not the most important numbers.

So one of the numbers that I will say is not too important is net sales, which also increased this time. And you can see the breakdown by the group and segment. Another number, which I again believe that is not too important, is EBIT. 62% increase in EBIT, so in past 9 months that we have exceeded ¥1.8 trillion. So since the foundation of SoftBank, this is the biggest EBIT number. However, this is not meaningless too much I think for me. But if you look up, take a close look, what is growing is Vision fund. That's something that very apparent for all of you. So Vision Fund is growing rapidly. And others are also making good growth as well. Net income, 52% increase, but some come from the one-time gain for last fiscal year, this fiscal year and so on. So I think this is another numbers that which is not too important for me.

So Vision Fund is the most biggest contributor. And for SoftBank Group, since the foundation, I believe this will be the one big milestone, and this will be one of the biggest pillar for SoftBank Group's business so that I would like to discuss a little bit more about the SoftBank Vision Fund. About 18 months ago, we have started it this Vision Fund. In these 18 months [Technical Difficulty] what I wanted to do with Vision Fund is actually made a big progress. We have invested more than 70 companies [Technical Difficulty] and these 70 companies, most of them are unicorns, and most of them are focusing on or involved in some way of AI. In the commitment structure of Vision Fund, this is, I believe, first time I discuss about this commitment structure. So it's ¥10 trillion fund, so-called. And in dollar term, USD 98.6 billion are committed amount, as of today. And on -- also, some billions is expected to be on top of this number, so sometimes soon that we are expecting to exceed USD 100 billion. Originally speaking, we aim to form USD 100 billion fund. So as we scheduled originally, we are to exceed $100 billion. And those private and active and those venture companies, we focused on those companies to invest. And with this size of the fund, we forecast on those private equities, private companies. And amongst those private equities and other funds, I believe we are the biggest size amongst all those, which I believe you all aware. But in addition to that, we have another characteristic of this Vision Fund, which is that in ordinary cases of those private equities or venture investments, only invest in equity to get the commitments of the capital. So the capital consists only equity, but in our case, we put it into two parts. One is the fixed distribution, which is 7%, is scheduled for the preferred equity. And one other is the normal equity.

So in terms of stocks, it's equivalent to preferred stock and common stock. Preferred equity is not borrowing. When fund fails, we are still not obliged to pay back. So again, it's equivalent to preferred stock. We are not debted. But performance of the fund doubles and triples, the part of preferred equity is 7% fixed distribution. So the performance stay the same in terms of distribution, 7%, even though are the investment doubles or triples. So again, it's preferred equity. And equity part is more fundamental high risk, high return, stock-like nature.

And SoftBank Group and management do only this equity part, which is performance-based distribution. So depending on the performance, the distribution will be determined. So this equity part, about half of equity part is owned by SoftBank Group. And our limited partners, or LP, are not involved in decision-making around investment. SoftBank's members make 100% decision, and partners contribute to us. And partners contribute a preferred part and equity part. Equity 1 -- preferred equity 1.57, that's the ratio of contribution from limited partner. Anyway, of 100%, 40% preferred and 60% equity. And of the 60% of equity, half is owned by SoftBank Group. That's how it's structured. This means a lot. I will come back to this point later.

This is one example. In the last 3 months, the latest 3 months, NVIDIA, which we invested less than 5%, about ¥300 billion of investment we have made in NVIDIA. And as of December end, it went up to $281 per share, which was the highest -- sorry, September-end, end of September, it went up to $281 per share, which was the highest. And as of December-end, however, it went down by half.

And there was a media coverage, like the market was different around NVIDIA and SoftBank, which invested in NVIDIA, even though they enjoyed double and more increase of the value. But the value deteriorated in the last 3 months. And again, the share price, down from $281 to $134 as of December-end last year. That's how it happened in the market. Well, as of today, it's recovered to $150 or something. But in the latest 3 months, it went up to the highest and went down by half. For this financial result, due to the deterioration of NVIDIA share price, SoftBank Group's consolidated operating income had about ¥400 billion of negative impact, ¥400 billion of negative impact from this deterioration of NVIDIA stock price. I don't like excuses. Again, minus -- negative impact of ¥400 billion on operating income. But like I mentioned earlier, in fact, operating income went up by 62%, or EBIT went up by 62% year-on-year. And negative -- without the negative impact from NVIDIA, it would have been better than 62%. So that's how you could calculate. So in reality, has Vision Fund lost as worth as ¥400 billion? In fact, floor price at $218 was the value that we bought in the color transaction. So the floor again was $218, and ceiling was around $300. So when NVIDIA stock price was going well, we put almost all call options and put options in the market. In other words, we purchased insurance at the time when NVIDIA share price was brilliant in stealth manner every month. When NVIDIA stock price was at the peak price every month, we put together or prepurchased so-called insurance without spending a lot of cost, which is a color transaction. So available insurance in the market was what we projest while we could. So almost all shares were protected by this color transaction.

In terms of EBIT, we had ¥400 billion of negative impact. But when it comes to net income, we were able to recover about ¥300 billion. So all in all, we haven't seen major impact from this NVIDIA stock price. Furthermore, our average acquisition cost per share was $105. And with this insurance scheme, we were able to recoup cash at the amount of $218. So in effect, we completed the transaction. So from our perspective, with this insurance scheme, we were able to absorb ups and downs, and we were able to recoup almost all the cash with this color transaction.

So the stock price started from $105 and ending at $218. The whole process was completed. And preferred stock part and common stock part of the SoftBank Vision Fund, what kind of impact did those scheme could have? We invested about $29 billion. But by having the floor at $218 -- even though the share price went down from $218, we couldn't suffer loss. And we could utilize instead as insurance for financing purpose of $29 billion, $70 -- we were able to recoup $17 billion by margin trade and other transaction. So from capital perspective, green part was $1.3 billion, and other part is borrowing. But since borrowing is secured by insurance, it's safer.

On top of that, I mentioned the preferred part and common part. For the preferred equity, this is performance based, so only for the green portion is the one that we held. And our partners holds both green portion and also the preferred portion, 1 versus 1.75 ratio. So preferred has -- they have more in the preferred.

And we, SoftBank Group, only has equity, and we have about half of those. And the share price go double, I mentioned, USD 22.9 billion to USD 5.5 billion, so share price go double. However, borrowings, absolute amount will not change. Preferred, $500 million stays as $500 million. Only 7% fixed distribution is made. Meaning, performance-based. Most of those gain is coming to SoftBank Group, so about 49%. This green portion, those gained portion, so 3.3 minus 0.7 and half of those growth comes to SoftBank. And on top of that, remaining goes to our partners. But out of those remainings, 20% comes back to SoftBank from our partners as a performance base. So that's the agreements that we have.

So we have about two -- doubled leverage there. So first is the fixed borrowings and the fixed distribution types of the preferred. That's one leverage. And also, we received money from partners in which 20% out of their gain comes back to SoftBank. So out of 100, ¥28 billion, which less than 1/3 is committed by SoftBank Group as an investor. But those gain, half of those gain and also 20% of those distributed amount to -- in partners is coming back to SoftBank Group. So there are 2 phase of leverage there for SoftBank Group. So that the more Vision Fund is success, the more SoftBank Group gains, which means that about 60% of the gain will come back to SoftBank. So about 1/3 of the -- what we have committed or less than 1/3 of the -- is committed by SoftBank and we'll be able to enjoy this gain.

And like this case, NVIDIA, after they go public, it is many safeguard and guarantees. We will try to make safe manner of exit. This is not something that I try to be proud of what we have done in NVIDIA because I just wanted to use this as one examples of our management policy of fund operation. So this is just one example.

Because we are not talking about this to ask you to invest in SoftBank Vision Fund, anything like that, but in of latest 3 months, although there was an impact of negative ¥400 billion to operating income, however, we are able to recoup to net income. In overall picture, actually, equity IRR, gross equity IRR for SoftBank shareholders' point of view, we are seeing 824%. So effectively 8x of gain, so that able to collect the investments.

So 100% in 1 year means double the amount. So we have a shorter term with several leverage with guarantees and everything, we were able to see 824% of gross equity IRR. So this is before we received those performance-based fee. So those 20% that we are expecting to receive out from their gain that will give us much better and higher numbers in gross equity IRR. And also, this is very safety management and operation.

Masayoshi Son, Softbank loves investments, but does not love selling the holdings. That's something people say. And even now that some people say that we invest in Alibaba about 20 years ago and we still have hold onto it, most of the part, so that people say, Masa does not like to sell or -- his securities. However, this is not true. For example, Yahoo! U.S., when share price was still high, we actually finished selling those of holdings. And I don't pick up one of each, but many of the cases we have invested in and also exited and received the results.

Alibaba, the reason we haven't sold majority of it is because they are still making 40% of sales growth. It's the big size of the operation. And because I believe in their further growth, that is why that we haven't sold or we still hold on to the securities of Alibaba. And there are 2 portfolio companies that we have exited and collected the investment. One example is NVIDIA I mentioned earlier. IRR for investments, 824%, which is gross equity IRR. Flipkart was 58%, so almost half of the gain actually. It became 1.6x in multiple. And as SoftBank Vision Fund, we have collected about ¥600 billion and we have distributed. And after then we made in 9 months collected ¥220 billion in 9 months. So for a year, going forward, several hundred billion yen in every-year basis we expected to be able to collect. And for this number does not include the 20% out of the partners' gain, so those are outside of this number. So after this, we will be receiving our performance fee.

And for these transactions that we have managers, partners, we have about 250 to 350 managers are there in SoftBank Vision Fund dedicated to these transactions in the past 18 months. London, U.S., China, Japan, India, so there are each dedicated people working in each those places. So that together with them, we will be receiving the performance-based fee from partners and also receiving management fee to pay for those managers, which is around 1% or so, depending on commitment by partners. 1% or some numbers of 1% is relatively a big number when it comes to this size of the fund. So I believe that is quite a equivalent numbers to cover those expenses for the operation of this big size of the fund.

So expenses can be covered by management fee and performance-based distribution. 20% on equity part comes from partners to SoftBank. That's how it works. By the way, I want to talk about shareholder value in a very simple manner. In the past, at the earnings call, SoftBank KK or SoftBank's Telecommunication business in Japan, Yahoo! Japan's business in Japan, Sprint sales in U.S. was like that. That's how our operating income and net income resulted in like this. That's how we put it in the past. But those companies I mentioned are all public companies. So public companies can communicate with them directly, and they discussed their own numbers. So I'm sure that you can talk to them directly about financial information from those public companies.

So then, what are kind of companies SoftBank Group has become? SoftBank Group is not an operating company anymore, pure holding company. So SoftBank Group holds group companies' shares. And from SoftBank Group shareholders' perspective, the value of the shares held by shareholders, how much is the value? That's probably the measurement that shareholders want to use. So again, SoftBank Group is not a telecom operator anymore. SoftBank Group is pure holding company. Ken Miyauchi is CEO of the telecom company, and that SoftBank's -- or what we call SoftBank KK internally.

So Ken Miyauchi leads SoftBank KK. And sales and technology and operations, those functions are holding -- sorry, supporting SoftBank KK, likewise. Sprint is independent. And Yahoo! Japan is independent in terms of profits and loss. So SoftBank Group is rather small holding company. It's not an operating company. And SoftBank Group is an investment vehicle, not operating company.

So to show SoftBank Group's value, a very complicating, bizarre balance sheet or complicating bizarre cash flow statement or consolidated profits and loss, those numbers don't mean a lot to show the value of SoftBank Group. Rather, our share value or value of the shares of the operating companies that SoftBank Group has are the value. So enterprise value minus that should be shareholder value. It looks very simple, but it's very important.

SoftBank Group, some people say that SoftBank Group has too many companies in their group. Well, that was the talk up until 3 months ago. From today onwards, at financial results I would say that ask those independent companies, independent public companies the value of the shares of the companies that we own subtracted by debt should be the value from shareholders' perspective.

Then the question is, how much is the debt of the SoftBank Group? So let me try to explain how much debt we have in SoftBank Group. It's very hard or impossible to understand by looking at just balance sheet. And consolidated balance sheet of SoftBank Group are ¥17 trillion of debt we have on the consolidated balance sheet. The SoftBank Group's net debt, ¥17 trillion on consolidated basis. So you may think that Softbank equals borrowing, Softbank equals debt. So many people would associate SoftBank as borrowing or debt. But in reality, well, again, if you look at the consolidated balance sheet, that's true we have ¥17 trillion of net debt. But if you go further down, we have cash equivalent worth ¥6 trillion. So ¥6 trillion of cash position. So subtract from ¥17 trillion gross debt minus cash position equals ¥11 trillion of net debt. So we just rounded up numbers less than ¥1 trillion. Why it's very rough number we are talking about at financial result or earnings call, I would dare to say. Because just to put simply, ¥17 trillion minus ¥6 trillion equals ¥11 trillion. That's SoftBank Group's net debt, ¥11 trillion. That's from consolidated balance sheet perspective.

However, there are public entities like SoftBank KK, SoftBank Telecom business and Sprint. Again, it's independently operated. And Yahoo! Japan independently operated as public entity. They have their own net debt, which is around ¥7 trillion in total. This ¥7 trillion, it may sound irresponsible. But from SoftBank Group's perspective, which owns just shares of the companies, we can't repay the debts. Otherwise, minority shareholders might file lawsuit class action because those companies, as independently operating companies, borrow their monies and issue bonds. So lenders lend based upon the financial position of those companies, not parent company. So even though SoftBank Group is a parent company, SoftBank Group doesn't have an obligation to guarantee those publicly operating companies' debt. We don't co-guarantee the debts. Sprint has different shareholders from SoftBank Group's shareholders. SoftBank Telecom business, Yahoo! Japan, they have different shareholders from SoftBank Group's shareholders. So we need to set clear boundary. We don't co-guarantee those companies' debts. In other words, they are not -- we can't pay on behalf of those companies. We can't repay the debts on behalf of those companies. Otherwise, we might be -- we could be sued, class action lawsuit, we could filed class action lawsuit. That's why we don't repay on behalf of them. It's nonrecourse. SoftBank Group's shareholders can't be damaged. So SoftBank Group's debt -- SoftBank Group shareholders' net debt is only ¥4 trillion, ¥11 trillion minus ¥7 trillion is ¥4 trillion. In fact, it's less than ¥4 trillion, ¥3.6 trillion to be exact. So only ¥3.6 trillion we have as a net debt. So rounded up, ¥4 trillion, I will say. So just a rounding error of ¥400 billion to ¥500 billion. So roughly speaking, ¥4 trillion, we have a repayment obligations. So when you look at net debt of SoftBank Group, it's not ¥17 trillion, it's ¥4 trillion. That's something very important. So that's why that I want to highlight that and wanted to understand this and then.

Enterprise value of Softbank less debt equals to shareholders' value. That's I mentioned earlier. And shareholders' value of SoftBank Group, how much that will be? That something that I would like to share. It's not complicated. It is simple. I want you to understand in simple way. First of all, SoftBank Group have ¥4 trillion of the net debt, which we have an obligation to repay. And the assets we own, simply put, Alibaba, Softbank Corp., Domestic Telecom business, Sprint, Vision Fund, Yahoo! Japan and some others. Others, ¥0.3 trillion, so it's very minor, rounding error again. So if we exclude others, simply put, we can tell the value of each assets, most of them. About 80% of them are public companies. Even on until recently, they were the public company, so that we can refer to the value in the 74% is in this calculation. So ¥25 trillion, those assets we have. Usually, when you look at balance sheet, for example, plant, headquarter office building, CapEx, equipments, land, there are so many things on the balance sheet as an asset. But are they really liquidate? If we want to sell, that's the time where that the core business is not going well at all.

So that land for the plant for such a core business, can you really sell? Is there any buyer for that? Do we -- if somebody really sees a value, any value in such CapEx or the equipments, you cannot really sell those. So even you have those assets on your balance sheet and you may like real estate, buildings, lands, those are the traditional financial institutions. But actually, cash or the free cash flow or marketable securities. As a pure holding companies, the asset we have is only those securities. Simply put, that's the case we are right now. And most of them are actually public companies. And we can clearly see the value of those companies with a share price, which we own about ¥25 trillion equivalent. Those marketable securities of ¥25 trillion, although we have a little bit more than that, but we just ignore those, and only with those marketable securities we have ¥25 trillion, less ¥4 trillion, then you see the shareholders' value. But before we go into that, each independent companies, they do have their own net debt. So those net debt, as I mentioned repeatedly, they are shown on our consolidated balance sheet, but they are actually obliged to repay based on the agreement with financial institutions. So we don't put any joint guarantee. We don't actually repay. We cannot actually repay those debt on behalf of them. So we do need to take those out. So -- and those are the numbers that we exclude for the share price. So that we exclude those debt. And that's their shareholders' value. And we have about ¥25 trillion of those group of shareholders' value. And also, we have a net debt of ¥4 trillion, and we less that, that will give us about ¥21 trillion, ¥25 trillion less ¥4 trillion equals to ¥21 trillion. It's just a beginner math.

Again, coming back to this slide. ¥25 trillion less ¥4 trillion, is it really ¥9 trillion? We have ¥25 trillion equivalent of securities, and we have ¥4 trillion equivalent of debt. If we take the ¥4 trillion out, that will give you the shareholders' value, but it's really ¥9 trillion. For this math, I want you do it by your own. But least I can say, this is not ¥9 trillion. The answer is not ¥9 trillion.

But as of today, when you see the market cap of SoftBank Group, this is ¥9 trillion. Market cap or shareholders' value of SoftBank Group's ¥9 trillion. What we have on our balance sheet is ¥21 trillion. So we have ¥21 trillion of the asset after debt. After repaying your debt, that's our shareholders' value. And our market cap, on the other hand is ¥9 trillion. What is this difference comes from? More specifically, when it comes to share -- share price per share, you have ¥20,121 unit equivalent of the securities, like no counting on the lands or real estate or buildings or anything. So for ¥20,000 equivalent share you have. However, your share price is only ¥8,400. That's the closing price of today, and SoftBank shareholder have ¥20,000 equivalent as a shareholders' value per share. However, only ¥4,000 is acknowledged. And where is this difference comes from? Is there anything wrong? Isn't it too cheap? So this is not something that I try to pitch you to buy our shares or anything, but me, myself, personally, this is too cheap. I think I do personally have 20-some-percent of SoftBank Group. I myself is a shareholder and also I think this is too cheap.

So then what happened? Buyback. That's something that I would like to announce here. About ¥600 billion equivalent as a maximum, we would like to repurchase our share. We would like to repurchase SoftBank Group's share for about ¥600 billion equivalents. What happen after we buy? We are expecting to eliminate all those, which means the number of share will go decrease. Decrease in share numbers, meaning asset value per share, we will increase for shareholders' point of view because the denominator is going to decrease. I mentioned ¥20,000 of the share price -- share value per person, and about 6.5% of total number of share will be eliminated. So that asset value per share we will increase along with that, so this is not ¥20,000 anymore. It's going to be even more than that.

Today's share price was about ¥8,400 per share. Repurchase period is until January 31 next year. It's around 1 year from now. In that period, up to ¥600 billion we are going to repurchase our shares, and the repurchased shares will be canceled. And I myself is a shareholder, and I would appreciate if the value of the share I has go up, so that's why we want to do share repurchase.

So how can we finance for ¥600 billion? SoftBank Group's direct borrowing is about ¥4 trillion or ¥3.6 trillion to be exact. And we are debted still, but are you going to repurchase your shares, you may ask. Well, recently, SoftBank Corporation, which was a telecom operator, was listed. And from SoftBank Group's perspective, after the tax we were able to get proceeds around the ¥2 trillion. Of ¥2 trillion of IPO proceeds. 1/3 would be used for repayment of debts. Again, SoftBank Group's direct obligation of repayment is ¥3.6 trillion. Of that, we will repay by about ¥700 billion.

Again, as of today, we have debt of ¥3.6 trillion net debt, and we are going to reduce that by ¥700 billion by using 1/3 of the IPO proceeds. And remaining portion, 1/3 of that would be used for share repurchase, ¥600 billion. And rest ¥700 billion will be used for future investment. Expected amount for investment is around ¥700 billion. So IPO proceeds after tax is ¥2.0 trillion, and 1/3 debt repayment, 1/3 share repurchase and 1/3 future investment. That how we are going to split the IPO proceeds. So ¥4 trillion of debts against assets, how dangerous or how safe the level is? In the year 2000, when the Internet bubble bursted, and after that a broadband business we invested in and we suffered a lot back then. And we learned a lot from that painful experience. So this time we want to run our operations in a very safe manner as much as possible, because share price can go down and go up. And as an investment vehicle, SoftBank Group wants to be offensive and also defensive. And we want to drive safely. And in order to drive our business safely, how much will be the best optimal balance loan-to-value? Well, people sell and buy shares. And against that activity, how much debt will be considered as safe? Well, maximum 35%. Well, over 35% would be the level which makes us very nervous.

So in terms of the LTV, loan-to-value that is -- so how much percentage of equity value of holding is net debt, which is shown in the number LTV. So how much debt can we have in a very safe manner against the equity value? And we think that up to 35% should be okay. But now we are looking at14%. We have seen it goes down to 14%. Of ¥25 trillion of equity value of holdings, about ¥11 trillion or half of that is Alibaba shares. And if Alibaba share price went down by half, LTV would be up from 14% to 19% around. 90% of LTV, even though Alibaba share went down by half, we think it's still okay. It's still safe. So if stock market tanked and all the shares we have went down by half, still, LTV would be 28%. So all went down by half, LTV 28%. And it's rare that all share prices went down by half at the same time. And net debt is about -- would be about 28% of the total value of the holding, which we think is a very safe level. So SoftBank Group is investment vehicle is a pure holding company. Well, I don't think that I am just a simple, pure, investor. But from investment group's perspective, it's easier for you to understand how we run the business. And I believe that there are three types of investors. One of the investors that I admire most is Warren Buffett. And he is cash flow-focused investor. Looking at balance sheet and looking at PL and looking at free cash flow, he makes a decision whether that particular company generates free cash flow in a very stable manner for the next 5 years and 10 years ahead, and he calculate it back to a present value and still whether the company's value is overvalue or undervalue. So again, he is pretty much focused on free cash flow. That's Warren Buffett, I think. He's brilliant investor.

And the second type of investor or investment group is not human, computer. That's an algorithm. It's a computer algorithm. So it acts fast, so essence of this computing investment move faster than a group of people or group of things. It's very simple algorithm. So when it's expected to go up, this computer would buy a second earlier than others. And if the value is expected to go down, the algorithm sells the shares earlier than others. So that's very simple. This is algorithm based on computing investor. Since this is computer, much faster than human; very, very brisk; and very, very fast. That's algorithm investment.

So for that computer, doesn't care whether American interest rate goes up and down, the foreign exchange rate or the company's earnings -- they care. The algorithm cares a lot, America's interest rate, company's earning level. And for me, it doesn't matter. It's all noise for me. And Warren Buffett succeeds and algorithm succeeds, and my way of success is different. I make an investment with vision. I'm pretty much focused on vision. This volume and organized investment based on vision -- I think SoftBank Vision Fund is the first that makes an investment based on vision with this scale. And SoftBank, in fact, has been focused around vision since the day of its birth. So SoftBank vision -- to SoftBank Group, vision matters most. So completely new animal, I will say.

So with this structure with such a strategic way and pinpointed focus, I think we've never seen such a case before. So in which way, which investor do you think make the most success which you will be able to see in the future?

So now when it comes to the vision of SoftBank Group, what is it? When it comes to vision, it sounds like a romantic dream, ambiguous, but for me this is very clear, very logical and very certain and also something that we will be able to bet in big time.

In the past 40 years history of SoftBank since its foundation, we only focused on one thing, only one things; never changed for a day. And I believe we will keep the same, which is Information Revolution. Every time when there is any wave of Information Revolution -- I will say, about once in 10 years, there is a big wave comes in, in a phased way. So amongst the big revolutions of 100 years, we see the steps towards the higher steps every once in 10 years. Those -- the large-size computer like Fujitsu, IBM, Hitachi, they have run, they run big computer. Then PC comes in, and microprocessors and then mobile. Softbank comes in. Internet comes, broadband, smartphones. So almost once in every year -- 10 years, we see next phase to next phase and seeing the paradigm shift. And now I see the biggest paradigm shift in this revolution, which is AI revolution. So amongst the all Information Revolution, I believe AI will be the biggest paradigm shift. So when it comes to AI revolution, what do you think it is? I'll try to explain it to you in very simple way.

Look at these two pictures. One is a carriage driven by a horse. So it's a horse carriage, so horse as a driver to make the move. Another one is engine. So people will move using engine, which is automobile. Look at these two. For you who already lives in this modern society, which do you like to bet? I will say 100% of you will bet on automobile. However, 100 years ago -- just about 100 years ago, if I made the same question to people, I will say people would bet on horse carriage as well because automobile just born at the time. At the time of the launch of automobile, people didn't -- were not able to understand the value of automobile, which is about 100 years ago.

So we do have a picture of 100 years ago here, which is the Fifth Avenue of New York year 1900. This is a real photo, back then. And you see several automobiles. You see people walking along. And here you see most of them are horse carriage. Just one automobiles is also in this frame. If you look at the expanded picture: There were about 100 horse carriage, and only 1 automobile is inside of this picture. Another photo just about 13 years later from here, same place, Fifth Avenue, New York, here you see automobiles, one after another. If you take a close look, just 1 horse carriage you can find. Just about 13 years later, this is the change that you saw. This is what we call it as a paradigm shift. 1908, T Ford was launched. So 1908, T Ford was launched, and just about 5 years later since its launch, you see here in 1913, just about 5 years -- and that's the change that you see. Before the T Ford, there were no such cars, just about one or so in New York, even in New York. So that's the change that we are talking about, and that's the paradigm shift that we are talking about.

So back then, before the launch of T Ford about back in 1900, the value was more in horses than the automobile because there was only about one car because -- engine goes wrong. If rains fall off or it's too expensive, if there is any river, you cannot really cross it. But horse can actually follow what the master says. And there are so many things that the people will see more value in horses rather than the automobiles. So there are 2 opinions. Rather more people actually bought horse carriage rather than automobile because you can tell from this photo that 99 out of 100 was horse carriage, but just about 13 years -- or just about five years after the T Ford launch, this is a change we saw. And I believe, in 10 years from today, in Fifth Avenue of New York this will be how you're looking at. Just about 10 years, Fifth Avenue of New York, it will be all around AI, autonomous driving. It may be 5 more years, but that's just about rounding error for me. 5 to 10 years, just about rounding error, but what I'm trying to say is that direction is important.

Is it horse? Is it engine or automobile? But the human-driving car or AI-driving autonomous car, I think there will be another paradigm shift happening here once again. Autonomous driving car will be 99 cars, and only 1 car drove by a human. That may not be happening in 15 years, but I will say, in 20 to 30 years, that will be the case. That's how I believe, and what I believe is the vision.

With vision, rather than car driven by human, car driven by AI is much safer. That's why the paradigm shift happens. So we are touching the most advanced technology every day. We can believe that. We can be sure that will happen. That's our vision, and that's the vision we have for our investment. And why do we believe? Why do we think that way? Let me explain. In the past 30 years, well, in fact, the -- only 3 elements of computers, CPU, data capacity and communication speed. Those are 3 major elements of computer -- or computing. Other elements are just margin of error. So those are most -- 3 most important elements. I love the term margin of error or rounding error. And why? Because looking at 10 years ahead, 20 years ahead and 50 years ahead, with vision, you can't be distracted by noise. Otherwise, you can't make a right decision. For me, E equal MC2. That's formula.

AI's computing power advanced dramatically. So in the past 30 years, those 3 major elements grew by 1 million, but looking at next 30 years, how much more these will grow, CPU, GPU or quantum computing, PPU, no matter what you put at the heart of computing will be 1,000,000x bigger again. That's what I believe. Likewise, memory would grow 1,000,000x. In speed, we have been running telecom business, so I believed I am an expert. Next to 4G is 5G. Next to 5G is 6G, and next to 6G is 7G. And it's endless. It never stops. Well, some people may say that it almost limit, and that's you are brains limit. And when you will -- a brain goes -- hit a limit, another person comes up. Well, some people say that in next 10 -- 3 years our technological evolution will hit the limit. For example, 8 bit to 16 bit, 16 bit will be the limit and no more is needed. Many people say that. Many experts say that. And I'll call them pseudo experts. Don't believe fake experts. That's what I said before. And the same thing would happen in next 30 years.

So long as our people's wisdom is there, supported by AI -- well, AI itself will have -- 1,000,000x powerful. So humans are brain cells. Just neurons get connected or gets disconnected. And then people think or people memorize. That's biological limit or physical limit there, but AI's processing capability will grow 1,000,000x more, CPU, GPU and quantum computing, GDU. A lot of technologies will emerge. And not only hardware, but also software will be more powerful. So AI -- at this moment, well, which is better, AI or human, when it comes to thinking or computing?

So 100 years ago, horse carriage versus car. Which was better? Which would be winner? So that's the same situation we are seeing now. Back then, maybe the argument was very controversial, but 100 years ago -- 100 years later -- all people say car was the winner, not horse carriage. So in 30 years, at least in terms of processing power, AI would exceed human. Of course, human has a heart. Human has humanity, kindness; and human has something important as a human. So to make people happy, to help people, human-centric AI will evolve going forward. That's what I believe.

So shareholder value or share value or enterprise value. The industry driven by AI would grow exponentially in terms of value. In other words, AI, it will be the biggest revolution in human history. That's what I believe. 100 years ago, in New York Stock Exchange -- well, New York Stock Exchange was established about 100 years ago -- around 1800, NYSE was established. Then back then, the market traded over agriculture, fishery and metals. Those are the industries where investment took place, but right after that, industrial and financial were the main industries, became new industries. But the last 10 years, of the top 10 global market cap, 7 are Internet-related companies. So top 10 market cap companies in the world, 7 are Internet oriented, which includes Alibaba which is one of our group companies. 10 years ago, there was only 1 of top 10 market cap, but in 10 years, only in 10 years, 7 out of 10 -- top 10 market cap companies in the world are Internet related. So that's brought by paradigm shift of Internet, but before you know it, I think AI will be the key player in top 10 market cap businesses in the world.

So not Internet-oriented companies but AI-related companies will be the top value holders. Why? Because AI computing power will grow 1,000,000x bigger. So from now, it continues to grow 1,000,000x. With AI as a tool, well, AI will be redefined -- redefine every industry. Well, Internet redefine what industries? Well, Internet redefined marketing industry. That's what happened, like Facebook and Google and Yahoo!. Those are advertising businesses, and those advertising businesses and business models are redefined by Internet. And also retail. So retail industry was redefined by the Internet. So traditional retail has evolved into e-commerce. In other words, only those 2 industries, marketing and retail, were redefined by the Internet, only 2, but when it comes to AI, not only 2 industries but also automobile industry, vehicle and pharmaceutical industry or health industry, broader health industry, construction industry, real estate industry, each and every industry will be redefined by AI.

So the impact of the AI redefinition will be much bigger. It is going to be the biggest paradigm shift and the biggest revolution in the history of human being. We will be actually creating the AI which is smarter than human brain. And they will self study, so not human teach them, but AI will sensing those variety of data, sensing from IoT, from mobile phone, from automobile, from buildings. They will be sensing the data and use as a base for the assumption, so data as a source. And it comes, leads to the results. That will change a variety of industry. That's the vision that I believe in.

It's very simple. Whether a horse is going to be winning or automobiles is winning, for me it's 100 versus 1. It is simple as that. That's the vision, and that's the belief I have. And for that vision, how should we build the strategy? And how should we creating the enterprise value based on that? That's the concept of Cluster of No.1 AI strategy. So vision is that we believe that AI will be making Information Revolution. And we would like to invest in those subsegment of AIs and look for those #1 companies of such businesses which were changed by AI, pharmaceutical, automobile, buildings. So those #1 unicorn that we would like to bring into our family group. That's the SoftBank Vision Fund, and for that we need capital.

In 20 years ago, if I or -- had such an capital, I would have invested in all of those Internet companies, unicorns. Then of course, we were -- we could have become the #1 companies in Internet, but it's not too late. History is interesting. We have another opportunity once again. We have the moment, which is the paradigm shift by AI. At the gateway of Internet paradigm shift, we didn't have enough money. We did have a little bit, but still it was not enough. It was about ¥1 trillion we have invested, and we have gained about ¥20 trillion of return. So in the past 20 years, we invested about ¥1 trillion and made a gain of ¥20 trillion. You saw the number ¥21 trillion earlier in the page. So for that portion, we have gained. If -- 20 years ago, back then there was only about ¥100 billion level, so -- and we spent about ¥50 billion each annual basis. And in 20 years, I invested about ¥1 trillion, and over those years that -- I have gained about ¥20 -- ¥20 trillion.

So in the beginning, we only have ¥50 billion, but this time we have a cap fund of ¥10 trillion, the SoftBank Vision Fund. So it's not ¥50 billion but ¥10 trillion. It was only ¥50 billion back then, and the Information Revolution just about dawn and spend -- invest in Yahoo! U.S. That was the only money we had. Immediately after the IPO, market cap was about ¥200 billion of SoftBank and only had about ¥50 billion for investment. So in average ¥50 billion per year over 20 years. We invest about ¥1 trillion as an equity. We have gained about ¥20 trillion of return. This time, it's not ¥50 billion, ¥10 trillion. And for this ties at paradise and -- for the paradigm shift at the gateway, that we can start investing in those unicorns, one after another. That's the Cluster of No.1 AI strategy.

So now Masa -- people say that Masa only speaks about Cluster of No.1 AI strategy. "And is there anything else you have?" And I will say, in 20 years, this is the only thing I will say. I will not say anything else but Cluster of No.1 AI strategy. So in the past 20 years, Internet revolution was the only one word I've been repeatedly saying Internet broadband, Internet mobile. So in the past 20 years, we were only chasing and focusing on Internet paradigm shift. Coming 20 years, we only focus on AI paradigm shift. So if you have a vision, you can take an advantage of strategy. That's the Cluster of No.1 AI strategy. And why are we doing this? Why, Masa? Is he trying to just get the money?

As a CEO and public company, we of course need to make an effort to maximize the value for shareholders, but that's not the only things. We also like to think about more. I have enough money. I may not be able to use everything. Then for me, the rest of my life, what is the value of me being here in this world is that I would like to make people happy with Information Revolution and happiness for everyone. That's how I feel from the bottom of my heart. And people say that I am speaking same thing again and again, but immediately after we launched the business, I spent about 3.5 years in hospital. I was about -- I was on a very -- in serious disease. And I thought that I would like to come back and see the people smile and happiness, and that's how I would like to bet my life for the rest of my life.

So on the Information Revolution. For what? For happiness for everyone. AI revolution because we want to do that for happiness for the -- everyone. So we want to do the human-centric AI revolution. That's something that we would like to achieve.

Simply put, 21 less 4 -- 25 less 4, is it equals to 9? I will question you. Is it right math? SoftBank Group looks like complicated group, too many equations. It's not true. E equals MC squared. For me, 25 less 4 is 21. That's for me of the E equals to MC squared. For me, AI revolution, for sure, it is happening. It is coming. For sure, it would redefine all the industry. That's my simple vision, and that's my simple strategy.

Thank you very much for your attention.

Unidentified Company Representative

Thank you very much. Now we'd like to open the floor for questions. If you have any question, please raise your hand and wait for microphone. And please begin your question by stating your name and affiliation. We'd like to take up to 3 people.

Unidentified Company Representative

Three people? That's too few. They -- they'll get mad. So we can extend hours. But maybe keep the question one per one person, please. One question per one person rather than 3 people, too many questions. But one question per one person, please.

Question-and-Answer Session

Q - Naotaka Owada

Owada from Nikkei Computer. About the formula equation, 25 less 4 equal 9, you mentioned. You talked about wallet, you talked about golden goose eggs and you were very good at explaining very simply and easily in 25 minus 4 equal 9. And how would you like to improve the perception? That's the timing difference. That's magic of timing difference. That's it.

Masayoshi Son

Time will tell. In the past, people associate the SoftBank Group with too many debts, too much debt and too much discounting. That's the perception people may have in the past. And some arguments were reasonable, but time will tell the truth. And time will tell the truth, and all noises will be cleared. And companies invested by Warren Buffett against the sum of the parts, I think that Warren Buffett is now enjoying a premium on top of sum of the parts. If you are earlier than others, you have to wait for some time. And we are advancing. I am advancing, always advancing, going ahead, and soon or later, time will tell. So next question, please.

Minoru Satake

My name is Satake from Nikkei Newspaper. So Huawei in China, that's my question. In U.S. and China, there is a battle going on in digital field and it becoming more serious. As for Huawei, that also has some relations to business of SoftBank Group. And also when it comes to U.S. government, you are looking at the merger, potential mergers between Sprint and T-Mobile. How do you see the situation?

Masayoshi Son

U.S. and China, there is a trade wars or political friction is happening these days. In the long run, friction is not a good thing, I believe, and there is nothing good for both parties. But in the past, U.S. was taking #1 position, and China is making a rapid growth. So I assume that there should be several frictions in any way. But with the full communication and with full understanding of each other's complaints and once we can find a compromise points with those deep understanding, sometime soon, I believe, this will be solved. That's how I believe, and that's the way it should be, I believe. I will say, before, there was such a trade war between Japan and United States, but now it's not that. And we were -- rather bigger relationship. So when you're making big growth, those traditional idea or traditional concept may cause some trouble in relationship. So I believe two parties needs to talk in deep and convince each other, then that can be settled in -- when time comes. That's how I see.

Minoru Satake

How do you look at market? You mentioned about NVIDIA. You took a risk, broad measures. And going forward, how do you look at the market?

Masayoshi Son

Well, interest rate in U.S., interest rate in Japan, from big vision perspective, those are, again, margin of errors. That's how I put it. In the short term, I'm not interested in selling and buying in short term in big picture, in a big region where the market goes up and down, the stock goes up and down next month or not. There are some experts who are discussing with them, who are working on them. So I hope they do the good job, but that's a day-to-day ups and down. It's not something I'm looking at. And whether it's good or bad, well, again, it's just a margin of error for me. But as a vision, what will happen in 20 years and 30 years and 40 years? That's how I look at things in my vision. Talking about NVIDIA, that's the companies that would lead AI revolution. We highly evaluated NVIDIA as one of the companies that lead AI revolution, and we invested in NVIDIA as a public company. And at the start -- beginning of every evolution, NVIDIA should play a big role. That's why we put investment in NVIDIA. But it -- we hedged with a collar transaction. We put some protection measures in place for NVIDIA, but there are a lot of unlisted unicorn companies. We are going to invest more in those unlisted unicorn companies. So that's why for NVIDIA, we are liquidated every investment we have made in NVIDIO -- NVIDIA, sorry.

Unidentified Analyst

My name is Takeda [ph] from TV Tokyo. I would like to ask you about -- in relation to IPO SoftBank KK. So at SoftBank Group, you just mentioned about buyback of shares of SoftBank Group. So I believe the source of the capital is from IPO proceeds. But the SoftBank KK, the share price is still below the offered price, which means for the shareholder of SoftBank KK, it's sacrificed. And SoftBank Group is using those proceeds for the buyback of the share. Also, relates to that, which is very close relationship in earlier questions also mentioned that SoftBank KK, because of the trade conflict between Japan -- U.S. and the China and the Huawei may cause more CapEx on SoftBank KK and that was also the same time it happens at the time of IPO, so how do you see the situation as all those?

Masayoshi Son

IPO SoftBank KK, ¥1,500 the offered price, which was fully discussed with experts of securities firm and also with the management team of SoftBank KK, and we came up with the appropriate price for the offered price. And of course, we believe that we have enough demand with that price. So after the several and serious discussion, we came to these results. Unfortunately, that we still see the share price below the offered price, and at the time of the IPO, there was unfortunate incident occurred, and we still see the share price go below. But yesterday, as you may saw, that there was earnings results announcement by SoftBank KK, and actually, 19% increase in operating income. Net income also increased just about the same size. So company itself, business itself is making good growth and steady growth. So actually, free cash flow is bigger than net income. So about 85% of net income is going to the dividend, meaning only 15% is going to be remain in the company. But actually, ¥400 billion of net income was the number, if I recall correctly. But the free cash flow was about -- over ¥500 billion, so cash-wise, actually, more than net income.

So our dividend yield -- speaking of dividend yield, but actually, the cash, it still remains in company because we have already built the big towers in the past few years, and that has already completed. However, as accounting expense-wise, that depreciation still remains. So depreciation expense still remains on the accounting side, but the cash is coming back to the company. So the 85% I mentioned earlier, but still, that's making a good accumulation of cash in the business. So it's making a steady and distributing steady dividend, and also, they may be able to consider increasing in dividend. So 5% or 6% or 7% dividend yield, those kind of discussion, we believe that they're in higher lever amongst all the public company in Japan when it comes to the stable distribution of dividend.

And I believe that will be very good base to talk about this ¥1,500 of the offered price. Of course, management of SBKK, they will be continuously put every effort to run the business. Huawei issue, right before IPO, there was news that SBKK is using lots of equipment by Huawei. And because of this trade -- friction between U.S. and China, SoftBank KK has to face replacing those equipments. It's going to cost a lot, and of course, I question to the management. But those equipments needs to be replaced will be about ¥5 billion level. That's going to -- that is going to be the core facilities of network. If there is any attack and if there is any risk to the network, it is regardless of Huawei equipment. But if there's any attack to the core network, then there will be a potential information leak in logical way. But that's not necessarily to Huawei equipment but any other equipments. And assume they haven't decide to the final decision yet, but assuming they're going to replace those equipments, but still it's going to be onetime expense of ¥5 billion spending. So Huawei equipment has been questioned as a burden on operation of the business, but that's not really true. And when it comes to 5G, they are looking into the requirements and the technical requirements, safety requirements and the cost side. So those are the factors that the management of SBKK will come to the conclusions to decide which equipments to choose, but I don't expect the big burden because of that to the business of SoftBank KK.

Unidentified Analyst

Hateburak [ph] from Wall Street Journal. You have made investment at significant pace. Looking at the SoftBank Vision Fund numbers, I would say more than half is used or paid. In fact, you may have to collect money more because your investment pace is so fast. So I wonder if you're considering further fund-raising. If that's the case, are you going to get some contribution from Saudi Arabia or not?

Masayoshi Son

Well, you not use up all fund pretty soon. So Vision Fund 1 continues for some time. But at certain point, we need to seek another round. And at that point, which investor we want to seek investment from, how much, should be determined based upon the negotiation on the terms and conditions at that time. Now it is too early to make a presumption. So due to time constraint, our next questionary -- no, no. We can't take more questions. I'll make executive decision.

Mayumi Negishi

My name is Negishi from Wall Street Journal. So if Saudi Arabia -- Saudi Arabia made a positive comment about additional commitment. But do you like to avoid the additional commitment? And also ¥2 billion additional investment in WeWork, I believe that you studied more -- much bigger size of the investment in WeWork. But why did you reduce -- scale down to ¥2 billion?

Masayoshi Son

From the team of Saudi Arabia, they've been giving us a kind commitment and also we being -- having good relationship between investors and the fund managements. But when it comes to next fund from [indiscernible] with what kind of term we go in to raise money, it's still too early to discuss. So there are terms to be discussed, conditions to be discussed. So that's how I see the situation. When it comes to WeWork, this is a company, one of the very good and excellent company amongst those invested portfolio we have. So on top of what we have invested, we decided to make additional investment in this business. And whenever they need -- and along with their growth speed, we would like to continuously keep a good relationship and sometimes led to enhanced relationship.

Kosuke Shimizu

Shimizu from Nikkei Automotive. In 2035, New York Fifth Street will be all about autonomous vehicles. And it sounds like you are relaxing or lax-ed. So anyway, GM and Toyota and Google are leading the autonomous vehicle sector. So what's your outlook for this sector in the future, in the near future?

Masayoshi Son

In the near future, well, AI-driven autonomous vehicles, who would be the first to buy such vehicle? I think companies that use those vehicles for -- they are industrial purposes or business purposes will be the first buyer, not consumer because such a new vehicle will be expensive, and it's just supercomputer. Even though it's a car, but it's essentially supercomputer. It's far expensive than traditional car. So I don't think that consumers would buy AI cars earlier than other. Rather, I think companies that would use those costs or business, like taxi business or ride-sharing business, those businesses and companies would be the first buyer of those autonomous vehicles. And ride-sharing companies, 90% of the global customers are supported by our group ride-sharing companies, 90% of the global demand. In other words, our group will be the biggest buyer of the autonomous vehicles. Then there will be a lot of opportunities to tie up with companies that deliver technology to us or we might invest in those companies that has a great technology. I mentioned Ford Model T before. And Ford, as of now, is the biggest profit earner or biggest seller in the world. Maybe Ford is not the #1 anymore now. So autonomous vehicle and autonomous vehicle technology, competition has just started. And a company that would buy those vehicles more than others and a company that would take advantage of those vehicles more than others will have better chance of success, so maybe partnership or commercial arrangement I would like to capture all opportunities and chances in that space. Next question, please.

Unidentified Analyst

My name is Kadota from Kyodo Tushing [ph]. So Uber Flex, they -- I heard they are preparing for IPO. So likewise, NVIDIA, are you going to sell all those shares that you hold of those portfolio companies after they go public? And I see some contradictions of such an exit if you are going to sell all of those holdings after the IPO. How do you see?

Masayoshi Son

So as long as we focus on investment, once we invest and when appropriate time comes, we will be sell in phase-ly manner. That's the ordinary operation. If you are the operating company, once you get -- or invest, you may need to hold on to it. However, because we pursue the Cluster of No.1 AI Strategy, when they're growing, we would like to hold on to it. But once we see some matured phase of those companies and if they can raise enough from the ordinary -- other investors, institutional investors, they can graduate from Vision Fund. That time comes sometime in the future. Of course, our investment partners agreed and take it natural to exit those portfolio companies. And that's the way the Cluster of No.1 AI Strategy is. We don't have any intention to control the company by holding 50% or more than 50% ownership. So we would like to become the majority in holding 20%, 30% and create synergies among -- for those portfolio companies. As a major shareholder, we would like to influence proactively. However, we don't control. And in each segment, we only pick up those #1 companies. That's the Cluster of No.1 AI Strategy. Because we have a lot of clusters, so when it comes to hundreds, we may want to see the graduation 2 or 3 or 5 companies and doesn't really changes our big picture or big structure.

Takahiko Hyuga

Hyuga from Bloomberg. And at the last part of your presentation, you said that you're seeing AI Cluster of No.1 Strategy for next 20 years. So does that mean Mr. Son will stay on top for next 20 years? About successor, what do you think about your succession plan?

Masayoshi Son

Well, as a CEO up until 69 years old. I think I'll be staying on CEO until the age 69 years old. After 69 years old as CEO or as a Chairman, even though active but delegate day-to-day operation to CEO, well, I will decide at that point. But when -- if a group center, a core business is investment and if you're not busy every day, then I will pass the baton to next generation. Recently -- well, evolution of medicine is amazing, and I am pretty much a healthy person. And I am energized, and I have fully a dream. And I will do my best as much as possible and as long as possible. But the -- until the age of 69 years old -- well, I made the decision when I was 19 years old, until I get 69 years old, I want to make a decision who'll be my successor, and maybe I will be Chairman, not CEO. Currently, I am Chairman and CEO. But after 69 years old, I may be just a Chairman. Who knows? Any more questions?

Mayumi Negishi

Negishi from Wall Street Journal. In Vision Fund speed, are you going to maintain the speed? And to keep the speed, when do you need to raise in the next round?

Masayoshi Son

We will keep the same speed. I think we will be more proactive. We are doing very good. Vision, it just about started. AI revolution, it just about started. Of course, we're going to continue. Timing for the fund-raising, size, structure, those are under discussion. Sometime when time comes, then probably it will come. But I don't need to rush. So many consideration, study, preparations are going on. Any other questions? If no more question, I think we had just a simple discussion today. Thank you very much.

Unidentified Company Representative

Thank you. This concludes the SoftBank Group Corp's. Earnings Result Announcement for the Nine-Month Period Ended December 31, 2018. Thank you very much for your cooperation. The video footage of this meeting will be distributed on demand...

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