TOKYO, Nov 6 — Japanese giant SoftBank Group said today suffered an operating loss of US$6.4 billion (RM26.5 billion) in the second quarter, the worst in its history, taking a hit from investments in start-ups including WeWork and Uber.
In the three-month period ending September 30, operating losses hit 704.4 billion yen.
“This is the biggest quarterly loss we have seen since our founding,” CEO Masayoshi Son said at a press conference shortly after the figures were released.
The firm said first-half operating losses from its Vision Fund and Delta Fund came to 572.6 billion yen, largely “due to a decrease in the fair values of investments including Uber and WeWork and its three affiliates”.
Net profit in the six months to September sank 49.8 per cent to 421.6 billion yen on an operating loss of 15.6 billion yen.
“My investment decisions were in many ways poor. I regret them deeply,” Son said.
But he defended his overall strategy, including continuing to plough funds into troubled office-sharing start-up WeWork, and insisted shareholder value continues to increase.
And some analysts said the results were “not so desperately bad.”
“How you react to these three-month figures would depend on your investment style, whether you trade over short periods of time or invest for the longer term,” Seiichi Suzuki, senior market analyst at Tokai Tokyo Research Institute, told AFP.
“It’s difficult to make a quick verdict on its business model,” he added.
The company did not publish its outlook for the year to March 2020, but uncertain roads lie ahead as shares in its key investments such as Uber and Slack continue to slide.
Son has faced renewed scrutiny of his investment acumen in the wake of WeWork’s dramatic fall from grace.
WeWork ‘not a sinking ship’
Last month, SoftBank confirmed that it was injecting billions of dollars into WeWork, once hailed as a shining unicorn valued at US$47 billion at the start of the year.
Son said SoftBank did not share the market’s view of WeWork as a “sinking ship”.
The start-up has gone from an investor darling to cancelling its IPO and seeing its co-founder Adam Neumann pushed out, albeit with a reported package of more than US$1.5 billion.
Under the agreement announced last month, SoftBank will increase its stake in WeWork from 29 per cent to around 80 per cent, and put top executive Marcelo Claure in place as executive chairman of the start-up’s board.
WeWork, which launched in 2010, has touted its model as revolutionising commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
In some cities, it is one of the major landlords, but its model of offering flexible, short-term leases is viewed by some as less of a selling point and more of a liability for investors.
SoftBank has gradually transformed from its start in software into a technology investor, taking stakes in some of Silicon Valley’s hottest start-up through its US$100 billion Vision Fund.
In July, the firm announced its long-mooted Vision Fund 2, again targeting funds of around US$100 billion, but investors have been slower to commit.
And in recent months, Son’s once-vaunted investment strategy has been questioned, with the disappointing IPO in May of one of its marquee names Uber only compounding the criticism. — AFP