Japanese conglomerate Softbank report Monday saw its biggest quarterly loss to date, $23.4 billion, due to poor performance in key technology investments and a weaker yen.
It was the second consecutive quarter of huge losses for the company and has been staggered by a broader weakening in global equity markets, with a paper loss to the publicly traded tech giant’s portfolio. Hundreds of unlisted company holdings were slashed.
For the company’s eccentric founder Masayoshi Son, the loss is the biggest in decades, and he says he will transform entire industries, from grocery shopping to construction, as the world changes. I was betting my future on huge, often undisciplined investments in tech companies I believed in. digital age.
In post-earnings comments, Mr. Son, as if chastised, reflected on lessons learned over the past year and said he would scale back his huge ambitions for the company.
“We took big bets, but they didn’t work,” said Mr. Son, adding that the company now makes fewer big bets, instead opting for a smaller, more strategic business with more modest potential earnings. He added that the company is choosing to make significant investments.
To that end, Mr. Son said the firm has systematized its investment decisions, putting them in the hands of experts rather than relying on intuition.
His solemn tone was in stark contrast to past exuberant moments, such as when he declared the company’s 300-year vision.
Son has long enjoyed risk-taking and big numbers. In 2017, SoftBank’s technology investment arm, the Vision Fund, became the world’s largest company at $100 billion, mostly raised from Saudi Arabia’s public investment fund. Last year, when the stock soared, he said he achieved record profits of over $46 billion in his March-ending fiscal year. This was achieved as the technology’s valuations surged as investors flooded into companies serving people stuck at home during the pandemic. .
But Son is also known for dramatic reversals of fortune. In the early 2000s, he briefly became one of the richest men in the world, but lost nearly all of his fortune when his internet bubble burst.
Over the past two years, Mr. Son has been on a new roller coaster. The pandemic initially caused his SoftBank investments in tech giants to sink, skyrocket, and then crash again. Companies like his Coupang, a South Korean e-commerce company, and his DoorDash, a food delivery app, surged on initial offers, but then plummeted.
Moreover, the crackdown on China’s tech sector has slashed the value of SoftBank’s huge portfolio of Chinese companies. In response, SoftBank quietly sold most of its Alibaba stake. His early $20 million investment in the Chinese e-commerce giant was a huge success, once accounting for almost 60% of SoftBank’s net asset value.
At last year’s all-time high, Son’s Vision Fund — the original Vision Fund, a second smaller Vision Fund 2, and a recent Latin American addition to the portfolio — is valued at more than ¥7 trillion ($52 billion). I grew up. ). By the end of June, however, the fund had given up almost all of the profits it had made in its entire history. Since March, the value of the Vision Fund’s listed stock has fallen 31%, according to Son.
SoftBank has also been hit by the yen’s depreciation over the past year, which has pushed up the cost of its dollar-denominated debt.
Due to recent losses and new investment directions, the company will likely have to make layoffs, Son said, adding: “We may need to significantly reduce the number of people in the Vision Fund.”
Son said it is also considering the sale of asset manager Fortress Investment Group, which it acquired in 2017 for more than $3 billion.
Following the announcement of financial results, SoftBank announced Buy back up to 400 billion yen ($3 billion) of treasury stock. The announcement follows his decision to buy back 1 trillion yen of his own shares last November. SoftBank’s stock rose slightly in Tokyo on Monday, after he’s lost more than 16% in the past 12 months, roughly in line with the Nasdaq index.
