Tokyo-based technology conglomerate SoftBank Group Corp. has announced a significant loss in the July-September quarter, largely due to its troubled investments, particularly in office-sharing company WeWork.
The company’s loss for the last quarter amounted to a staggering 931 billion yen ($6.2 billion), a drastic downturn from the 3 trillion yen profit recorded during the same period the previous year.
SoftBank has an extensive investment portfolio, leading to fluctuating financial results that align with market trends. However, its recent association with WeWork has notably impacted its earnings.
WeWork, which filed for Chapter 11 bankruptcy protection this week, faced immense challenges amid the COVID-19 pandemic that caused a surge in vacancies within major U.S. cities like New York and San Francisco. SoftBank currently holds an impressive 80% stake in the beleaguered company.
In an effort to reassure investors, SoftBank’s chief financial officer, Yoshimitsu Goto, emphasized during an online news conference that the company remains resilient overall. Goto stressed that SoftBank will continue to exercise prudent investment strategies and pursue growth.
Goto expressed regret over WeWork’s troubles and affirmed that SoftBank would thoroughly analyze the situation to improve its future investments through the Vision Fund.
SoftBank: A Financial Update
SoftBank, the pioneering telecoms operator responsible for introducing the iPhone to Japan, has reported a significant financial loss in the July-September quarter. The company announced that it totaled 234 billion yen ($1.5 billion) in relation to its involvement with WeWork.
Despite this setback, there is cause for optimism as SoftBank recently saw success with the IPO of Arm, a British semiconductor and software design company acquired by SoftBank in 2016. While the listing did not directly impact SoftBank’s earnings, it did result in a sizable gain of $47 billion, reflected as a capital surplus.
Quarterly sales for SoftBank remained relatively stable, with a marginal increase from 1.61 trillion yen to 1.67 trillion yen ($11 billion). The company, however, has chosen not to provide full-year forecasts at this time.
It’s worth noting that SoftBank was once a significant stakeholder in tech behemoths like Amazon, Facebook, and Alphabet. However, these positions were sold off in recent years. Additionally, the company made the decision to reduce its stake in Uber and Alibaba, the renowned Chinese e-commerce and technology corporation.
Despite these challenges, SoftBank Group Corp.’s shares experienced a modest rise of 1.1% on Thursday when trading on the Tokyo Stock Exchange concluded.