SoftBank Group Corp., the Japanese technology giant, faced a substantial setback in the July-September quarter, reporting a massive loss of 931 billion yen ($6.2 billion). This stark reversal from the 3 trillion yen profit recorded in the same period a year earlier can be attributed to the challenges in its expansive investment portfolio, notably the troubled office-sharing company WeWork.
The difficulties at WeWork have been a focal point, especially as the company filed for Chapter 11 bankruptcy protection amidst disruptions in the U.S. commercial real estate market.
The aftermath of the pandemic witnessed a surge in vacancies in major cities like New York and San Francisco, impacting WeWork’s operations. Holding an almost 80% stake in WeWork, SoftBank felt the brunt of the fallout.
Yoshimitsu Goto, SoftBank’s Chief Financial Officer, sought to reassure investors during an online news conference, emphasizing that the company remains robust overall.
Goto highlighted SoftBank’s commitment to making prudent investment decisions and reiterated its plans for sustained growth. He acknowledged the setbacks with WeWork, deeming them “regrettable,” and pledged to analyze the situation to enhance future decision-making, particularly with its Vision Fund investments.
The financial toll of WeWork on SoftBank in the July-September quarter amounted to 234 billion yen ($1.5 billion). Despite this setback, Goto pointed to positive developments, citing the recent initial public offering (IPO) of British semiconductor and software design company Arm, acquired by SoftBank in 2016. While the IPO did not directly impact SoftBank’s earnings, a capital surplus gain of $47 billion was recorded.
SoftBank’s quarterly sales saw a marginal change, increasing to 1.67 trillion yen ($11 billion) from 1.61 trillion yen. Notably, the company should have provided full-year forecasts. Once a significant stakeholder in tech giants like Amazon, Facebook, and Alphabet, SoftBank divested those holdings in recent years. The company also shed its stake in Uber and significantly reduced its holdings in Alibaba, the Chinese e-commerce and technology giant.
Despite the challenges, SoftBank Group Corp. shares experienced a 1.1% rise on the Tokyo Stock Exchange, reflecting investor confidence. As the company grapples with the fallout from WeWork and charts its future course, the resilience demonstrated in the face of losses suggests a strategic approach to weathering uncertainties in the ever-evolving tech investment landscape.