Wednesday, 13 November, 2019


SoftBank Takes 6.5 Billion Dollar Loss From WeWork, Uber

Work sign on a building in New York. — AP Work sign on a building in New York. — AP
Conrad Doyle | 08 November, 2019, 17:55

Japanese giant SoftBank Group said Wednesday it suffered an operating loss of $6.4 billion in the second quarter, the worst in its history, as it took a hit from investments in start-ups including WeWork and Uber.

SoftBank CEO Masayoshi Son shouldered the blame for the weak results, according to the Wall Street Journal.

The Tokyo-based company reported Wednesday a July-September loss of 700 billion yen ($6.4 billion), down from a 526 billion yen profit the same period a year ago.

At Uber that slide has continued as losses continue to mount and a post-IPO share lock-up ends, with its shares hitting new lows this week. Preparations for a "full-scale launch" are still underway, SoftBank said. "I regret them deeply".

"This is not a storm".

Son said WeWork was losing money from initial construction and design costs but, with time, its properties will become profitable. "We will move ahead".

The boss of Softbank has admitted poor judgement in relation to its investment in WeWork after reporting its first quarterly loss in 14 years.

SoftBank reported 537.9 billion yen of unrealized losses in a plethora of investments from Uber to WeWork.

"It's hard to make a quick verdict on its business model".

Brokerage firm Jefferies downgraded SoftBank from buy to hold last month, and called on the Japanese firm to clarify its investment strategy.

Last month, SoftBank confirmed that it was injecting billions of dollars into WeWork, once hailed as a shining unicorn and valued at $47 billion at the start of the year.

The depth of the loss casts doubts on founder Masayoshi Son's high-risk strategy of investing in cash-burning startups, as he is trying to raise a second massive investment fund.

He also emphasised that WeWork is "not a sinking ship" and that SoftBank's chief operating officer, Marcelo Claure, will be brought in to bolster the shared workspace company's corporate governance.

"I want to make it clear".

"Regarding WeWork... This will remain an exception".

Late last month, WeWork secured a $9.5 billion rescue package from SoftBank, a deal that handed 80 percent of the company to the conglomerate.

WeWork is considering surrendering a portion of a recently signed lease in Wan Chai, near Hong Kong's central business district, people familiar with the matter said.

Bloomberg reported Wednesday that the start-up was considering giving up office floors in at least six Hong Kong locations.

The Saudi Arabia-backed Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, had invested $70.7 billion in 88 companies at the end of September.

Son said investors are still reaping profits from the Vision Fund and that the division's value for shareholders has not fallen.

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