SOFTBANK HIT BY 704 B YEN LOSS
Results cast doubt on founder’s strategy of investing in cash-burning startups
SOFTBANK Group Corp plunged yesterday to a quarterly loss that was far larger than analysts’ estimates, hit by the falling valuations of some of its biggest tech bets such as WeWork and Uber Technologies.
The Japanese investment giant recorded an operating loss of 704 billion yen (RM27 billion) in the July-September quarter. It recorded an operating profit of 706 billion yen in the same period a year earlier.
The loss compared with an operating loss of 48 billion yen forecast on average by four analysts.
The group’s first quarterly loss in 14 years casts doubt on founder Masayoshi Son’s highrisk strategy of investing in cashburning startups, as he is trying to raise a second giant investment fund.
The investment conglomerate said its US$100 billion (RM414 billion) Vision Fund recorded an unrealised loss of 537.9 billion yen for the six months as the value of its tech bets such as WeWork and Uber tumbled.
The Saudi Arabia-backed Vision Fund, which is run by exDeutsche Bank banker Rajeev Misra, has invested US$70.7 billion in 88 companies at the end of September. Those investments are now worth US$77.6 billion excluding exits, it said.
Last month, SoftBank was forced to spend more than US$10 billion to bail out office-sharing startup WeWork after its initial public listing (IPO) attempt flopped.
With increased market scrutiny over the path to profitability for many of its bets on unproven startups, SoftBank is struggling to take them to market — an essential step to unlock capital to keep its investment juggernaut growing.
The value of most of the fund’s listed investments, including Uber, Slack Technologies and Guardant Health fell over the quarter.
At Uber, that slide has continued as losses continue to mount and a post-IPO share lock-up ends, with its shares hitting new lows this week.
SoftBank did not release a forecast for the current business year, saying there were too many uncertain factors. Reuters