SoftBank Group plunges to $6.5 billion quarterly loss as tech bets stumble

Reuters Tokyo | Updated on November 06, 2019

Masayoshi Son, Founder, SoftBank Group   -  REUTERS

Vision Fund recorded unrealised ¥537.9 bln loss for 6 months

SoftBank Group Corp plunged on Wednesday 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 ($6.46 billion) in the July-September quarter. SoftBank recorded an operating profit of ¥706 billion in the same period a year earlier.

The loss compared with an operating loss of ¥48 billion forecast on average by four analysts, according to Refinitiv.

The group’s first quarterly loss in 14 years casts doubt on founder Masayoshi Son’s high-risk strategy of investing in cash-burning start-ups, as he is trying to raise a second giant investment fund.

The investment conglomerate said its $100 billion Vision Fund recorded an unrealised loss of ¥537.9 billion 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 ex-Deutsche Bank banker Rajeev Misra, has invested $70.7 billion in 88 companies at the end of September. Those investments are now worth $77.6 billion excluding exits, it said.

Last month SoftBank was forced to spend more than $10 billion to bail out office-sharing startup WeWork after its 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’s investing activities are propped up by other pillars of Son’s empire including domestic telco SoftBank Corp , which on Tuesday reported a 9 per cent rise in second-quarter operating profit, beating estimates, buoyed by its cash-cow mobile business.

SoftBank did not release a forecast for the current business year, saying there were too many uncertain factors.

Published on November 06, 2019

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