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Son's failed tech bets behind Softbank Group's $6.5 billion quarterly loss

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

Sam Nussey | Reuters  |  Tokyo 

The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo. (Photo: Reuters)
The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo. (Photo: Reuters)

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 and .

The Japanese investment giant recorded an operating loss of 704 billion yen ($6.46 billion) in the July-September quarter. 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, 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 startups, 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 yen for the six months as the value of its tech bets such as 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 at the end of September. Those investments are now worth $77.6 billion excluding exits, it said.

Last month was forced to spend more than $10 billion to bail out office-sharing startup 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% 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.

 

First Published: Wed, November 06 2019. 12:08 IST
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