Shrinking the balance sheet through the dot-com crash (2000)

The turn where the fragility of running on unrealized gains came into the open

The question running through the decisions of this period was how to treat a corporate value that a share price had created. A market capitalization of ¥20 trillion was a figure produced not by SoftBank’s own earnings but by unrealized gains on other companies’ shares — and one that would vanish just as fast once prices turned. Selling holdings amid the collapse to cut debt, a selective disposal, was the realistic response of a company acknowledging that fragility and trying to travel light. It was the period in which a balance sheet swollen by aggressive expansion was deliberately shrunk by its own hand.

The decision, in the same period, to buy a failed bank is judged more variously. Suspicions that it would be turned into a captive “institution bank,” and the turmoil of the death of the man at its top, drove home the weight of an investment company holding a business as public in character as a bank. Running a defensive shrinking of assets and a criticism-inviting bank acquisition at the same time, this period can be seen as showing, in its sharpest form, the contradiction carried by an investment company dependent on unrealized gains. The tilt toward ADSL from the following year was one answer to that contradiction.