SoftBank racks up losses as Vision Fund investments plunge

TOKYO (AP) — Japanese technology company SoftBank Group Corp racked up a loss of JPY961.6 billion (USD9 billion) for the fiscal year through March, on red ink related to its Vision Fund investments including troubled office space-sharing venture WeWork.

SoftBank, founded in 1981, said yesterday the drop in share prices around the world from the fallout of the coronavirus pandemic had slammed the value of its sprawling investments. Tokyo-based SoftBank had reported a profit of JPY1.4 trillion the previous fiscal year. Its sales for the fiscal year inched up one per cent to JPY6.2 trillion (USD58 billion). It did not immediately break down quarterly results or give a forecast for the fiscal year through March 2021.

On top of WeWork’s poor performance, the company suffered damage to the value of Uber and other holdings in its portfolio. The pandemic is adding to uncertainties.

The merger of Sprint with T-Mobile in the United States (US) was completed on April 1, in one bit of good news.

The pandemic was not expected to affect SoftBank’s telecommunications business, such as mobile phone services in Japan. As people stay home to help curb the spread of the coronavirus, they tend to use more online deliveries and other internet-based activities. But the company’s technology licensing and royalty revenues may drop due to Arm, which provides microprocessors and other technology and is also part of SoftBank’s operations, because of pandemic-related disruptions.

A person walks by a SoftBank shop in Tokyo on October 8, 2019. Japanese technology company SoftBank Group Corp racked up a loss of JPY961.6 billion for the fiscal year through March, on red ink related to its Vision Fund investments, including troubled office space-sharing venture WeWork. PHOTOS: AP
Founder of Alibaba group Jack Ma. SoftBank announced Chinese billionaire Jack Ma was stepping down from the board. PHOTO: AFP

SoftBank’s chief executive, Masayoshi Son, told reporters the company was facing “unprecedented challenges” because of the pandemic.

But he said some businesses such as Chinese e-commerce giant Alibaba and Arm hold great potential, and the stock value of SoftBank’s holdings has fallen but is not crashing.

“I realise I am giving excuses, and the extreme economic hardships from this ‘corona-shock’ are very real,” Son said.

SoftBank bailed out WeWork last year, and severed ties with its co-founder Adam Neumann, whose reported lavish living has tarnished the brand.

Its IPO was ditched, and SoftBank has shelved its tender offer.

The future of the office-sharing business model itself is in question as reopening economies try to abide by social-distancing measures against the virus that causes COVID-19. Earlier in the day, SoftBank announced Chinese billionaire Jack Ma was stepping down from the board.

Son said the move was related to Ma’s decision to semi-retire, including from his post at Alibaba.

They continue to communicate regularly as “like-minded soulmates,” said Son.

“It’s sad to see him go, but we will be best friends forever,” he said.

SoftBank is a major investor in Alibaba. Ma, who joined the SoftBank board in 2007, and Son have a longstanding close relationship.

Ma, the co-founder of Alibaba, has been focussing on philanthropy lately, such as donating masks and test kits to help in the efforts against the pandemic.

SoftBank announced three new board members, including SoftBank Chief Financial Officer Yoshimitsu Goto and Waseda University professor Yuko Kawamoto.

Another new member is Lip-Bu Tan, founder of Walden International, a venture capital firm focussed on computer chips, cloud and artificial intelligence (AI). He is also chief executive of Cadence Design, a US electronic design automation software and engineering services company.

Son said that adding outside board members will enhance corporate governance at SoftBank, responding to criticism he wielded too much control.

Also yesterday, SoftBank said it was buying back its own shares, of up to JPY500 billion (USD4.7 billion) in value, to shore up its bottom line.

“I am not totally pessimistic, given all the challenges we have faced in the past,” said Son. “We will keep at it.”