SoftBank Posts Record Loss on Startup Bets

“My own investment judgment was really bad. I regret it in many ways," CEO Masayoshi Son admits.
Matthew HellerNovember 7, 2019

SoftBank posted the worst quarterly loss in its 38-year history as its signature tech investment fund Vision Fund took an $8.9 billion hit from bad bets on cash-burning startups.

CEO Masayoshi Son apologized for his “really bad” investment judgment and indicated a shift in strategy after SoftBank announced it plunged to an operating loss of 704 billion yen ($6.5 billion) in the July-September quarter compared to a 706 billion yen profit in the same period a year earlier and a 48 billion yen loss forecast by analysts.

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The $100 billion Vision Fund contributed an operating loss of 970 billion yen ($8.9 billion) and an unrealized loss of 537.9 billion yen for the first six months of the year as the value of its bets on tech companies such as WeWork and Uber tumbled.

SoftBank Group Chairman and Chief Executive Officer Masayoshi Son

“The scale of the loss shows the risks in Son’s strategy of splashing out big on cash-burning startups,” Reuters said. “It has also cast a pall on his efforts to raise a second massive fund.”

SoftBank was forced last month to spend more than $10 billion to bail out WeWork after its IPO attempt flopped.

“My own investment judgment was really bad. I regret it in many ways,” Son told reporters, adding that he had turned a blind eye to problems with WeWork co-founder Adam Neumann in areas such as corporate governance.

SoftBank and the Vision Fund have collectively invested nearly $20 billion in WeWork. They now value the company at only $7.8 billion, having written down their investments by $4.7 billion and $3.5 billion, respectively.

“Mr. Son is fighting to preserve his reputation as one of the world’s savviest and most influential technology investors,” The Wall Street Journal said.

At his news conference, Son said he would never bail out another portfolio company and the ability to turn a profit would now be the premier yardstick for measuring the value of his investments. “There is no need for me to be overcome with regret that I wither away,” he said. “The vision remains the same.”

Alessandro Di Ciommo/NurPhoto via Getty Images

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