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Saturday, Sep 07, 2024

SoftBank reports record $23B quarterly loss as tech downturn hits

SoftBank reports record $23B quarterly loss as tech downturn hits

Japanese technology investor SoftBank Group Corp. on Monday reported a record quarterly loss of more than $23 billion after its Vision Fund investments suffered from the global selloff in technology shares.

The April-June loss was about 1 1/2 times the previous record set just three months earlier in the January-March quarter.

The weak results reflect the fall in technology shares around the globe recently, sparked by interest-rate increases and China's crackdown on tech companies.

Shares of Uber Technologies Inc. and DoorDash Inc., two U.S. companies in which SoftBank has invested, fell more than 40% during the April-June quarter. SoftBank said its Vision Fund 1 has fully exited its position in Uber.

SoftBank rushed to plow its money into tech startups last year, seeing new opportunities in businesses such as finance and health that were changing in the pandemic era. Chief Executive Masayoshi Son and his team invested $38 billion from SoftBank's Vision Fund 2 into 183 companies last year, according to SoftBank's filings.

On Monday, Mr. Son said he got overexcited during the period when tech valuations were booming. "When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful," he said.

In May, as the losses from those investments began to emerge, Mr. Son said he was switching to a defensive policy.

He said Monday that SoftBank's Vision Funds approved about $600 million in investments in the April-June quarter, down from a peak of $20.6 billion in the same quarter a year earlier. He said the caution would continue, even though the market's decline may make some companies a bargain.

"Now seems like the perfect time to invest when the stock market is down so much, and I have the urge to do so, but if I act on it, we could suffer a blow that would be irreversible, and that is unacceptable," he said.

SoftBank said it turned some of its older investments into cash to shore up its finances. It said it raised $10.49 billion using its shares in Chinese e-commerce company Alibaba Group Holding Ltd. SoftBank used what it calls prepaid forward contracts, in which it gets cash upfront from its lenders and promises to settle the contract later either with cash or with Alibaba shares.

FILE - In this Dec. 4, 2018, file photo, people walk past in front of a SoftBank shop at Ginza shopping district in Tokyo. SoftBank's shares have been steady recently and rose 0.7% on Monday in Tokyo trading, which ended before the release of the res


SoftBank reports its results in yen. The net loss in the April-June quarter was Yen3.16 trillion, equivalent to $23.4 billion at the current exchange rate. That compares with a net loss of Yen2.1 trillion in the January-March quarter. For SoftBank's full fiscal year ended March 31, it reported a loss of Yen1.71 trillion, a record annual figure, equivalent to $12.7 billion at the current rate.

SoftBank's shares have been steady recently and rose 0.7% on Monday in Tokyo trading, which ended before the release of the results.

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