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SoftBank recorded a Massive Operating loss of $17.8 Billion

Masayoshi Son‘s once strong conglomerate SoftBank has been struggling – reporting 1.3 trillion yen (S$17.76 billion) operating loss.

The Japanese multinational conglomerate holding company SoftBank reported a 1.3 trillion yen (S$17.76 billion) operating loss for its fiscal year that ended in March. The loss shows how the Chief Executive of SoftBank Masayoshi Son speculations on tech startups have been battered in recent months.

Son, in his recent interview with Forbes, talked about his predictions on the $100B Vision Fund and said that he thinks 15 of the companies under the Vision Fund will go bankrupt. He specially mentioned the office-rental WeWork, which filed for bankruptcy last month.

SoftBank’s initiative to help WeWork’s IPO plans last year receives a blow after another. In WeWork’s bankruptcy alone, the conglomerate already lost a massive number.

SoftBank also expects a 1.8 trillion yen loss from its Vision Fund and an additional 800 billion yen loss from its own investments.

“This is looking more like the perfect storm for SoftBank,” said Justin Tang, head of Asian Research at United First Partners. “The question is whether there is more to come,” Tang continued.

SoftBank’s investors feel more and more alarmed about the stability of Son’s authority and its $100B Vision Fund. The conglomerate reported a more than 50 percent loss at one point this year. Additionally, Son has drawn uncommon pressure from some inventors

Elliott Management Corp, an American investment firm, asks a consequential stake in the company, proposing a change of administration and investing practices.

But Son responded with a different strategy, planning to unload about US$41 billion in assets to buy back shares and pay off debts. According to Bloomberg News, the plan is to sell US$14 billion of shares to Alibaba Group Holdings.

“This will only make assets sales even more urgent for SoftBank,” stated Koji Hirai, the head of M&A at advisory firm Kachitas Corp. in Tokyo.

This has been a sudden turnaround for the Korean-Japanese billionaire Son. Just two months ago, Son said that SoftBank is doing great and that the fortunes from WeWork bankruptcy is turning around.

“After a difficult winter always comes spring,” Son said at that time.

But Son’s positivity cannot solve all the problems the conglomerate is facing right now. Another problem is Oyo, a hotel-booking service, which was also suffering because of the COVID-19. SoftBank invested US$1.5 billion in Oyo. Ritesh Agarwal, founder and CEO of the rental service said that the company is laying off some of its employees outside India because of the virus. Furthermore, Agarwal also borrowed US$2 billion which was granted by Son.

Both WeWork and Oyo have contributed to SoftBank’s profits before. But the Vision Fund now is struggling and is piling up losses. On Tuesday, April 14, SoftBank reported a loss of shares for as much as 4.2 percent to 4,025 yen in Tokyo. The fund has lost an increasing 240 billion yen including the latest forecast.

“The coronavirus was the final blow, but bad investments and misjudgments were the start,” said Hirai.

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