SoftBank posts $6.5 billion loss on WeWork, Uber and other bets

SoftBank Posts Record Loss on Startup Bets

SoftBank Posts Record Loss on Startup Bets

Some of Masayoshi Son's biggest tech bets are leading to multibillion dollar losses. It has also cast a pall on his efforts to raise a second massive fund.

SoftBank agreed a $9.5 billion rescue package with WeWork last month in exchange for an 80% stake in the ailing business. "I regret it in many ways", CEO Masayoshi Son said at a news conference, according to The Wall Street Journal. CNBC calls it a "remarkable admission" from the 62-year-old "well known for his ebullience".

He said he had turned a blind eye to problems with Neumann in areas such as corporate governance.

Still, he was defiant that WeWork was still a solid business, saying there would be a "hockey stick" recovery in its profits eventually.

SoftBank reported 537.9 billion yen of unrealized losses in a plethora of investments from Uber to WeWork, which alone prompted 497.7 billion yen of that writedown.

The operating loss was 704.4 billion yen ($6.5 billion) in the three months ended September 30, the Tokyo-based company said in a statement on Wednesday.

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SoftBank lost at least $4.7 billion by investing in WeWork after the shared-workspace group's initial public offering collapsed and its $47 billion valuation from January plunged to below $10 billion. It has more than $51 billion in outstanding bonds, and another $36 billion in bank loans.

With this, the company has said that it has ended the quarter with 88 investments at cost totaling $70.7 Bn, with fair value amounting to $77.6 Bn (excluding exited investments).

With increased market scrutiny over the path to profitability for many of its bets on unproven startups, Son was also more cautious about the timings of IPOs- an essential step to unlock capital to keep its investment juggernaut growing.

However, before all of this happens, the company has put an early stop on its investments via first vision fund. Its signature Vision Fund - the world's single largest pool of startup investments - reported a ¥970.3 billion loss in the quarter.

The company did not publish its outlook for the year to March 2020, but uncertain roads lie ahead as shares in its key investments like Uber and Slack continue to slide.

The Vision Fund had been a driver of profit growth at SoftBank, contributing over $14 billion in mostly paper gains over the past two years.

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