Investments

WeWork Write-Off Triggers $6.5B Loss For SoftBank 

quarterly earnings, softbank, vision fund, wework, Masayoshi Son, startups, news

Japan’s SoftBank reported a $6.5 billion loss on Wednesday (Nov. 6), its first quarterly drop-off in 14 years and far larger than analysts’ estimates, Bloomberg and other news outlets reported. 

The $10-plus billion WeWork bailout — an investment chief executive officer (CEO) Masayoshi Son called an error in judgment — triggered a loss of ¥970 billion ($8.9 billion) at SoftBank’s Vision Fund and a smaller fund.

“There was a problem with my own judgment, that’s something I have to reflect on,” he said at a news conference following the quarterly earnings report.

For the July-September quarter overall, SoftBank recorded a net loss of ¥704.4 billion yen ($6.5 billion) after write-downs in WeWork and other investments. 

“Today’s earnings are a mess,” Son said. “It’s red all over.”

SoftBank sunk more than $10 billion into office-sharing startup WeWork after its IPO attempt failed. Son admitted he had “turned a blind eye” to problems with WeWork’s founder and CEO Adam Neumann. Neumann stepped down in September with more than a billion-dollar payout. Once having a $47 billion valuation, WeWork’s dropped to $10-12 billion.

Son insisted, however, that WeWork was still a solid business and predicted a “hockey stick” recovery in its profits, Reuters reported.

“I learned a harsh lesson and I should have known better,” Son said. “But I don’t regret it too much. I won’t be too nervous about future investments. I am staying confident.”

SoftBank’s Marcelo Claure is taking over as chairman of WeWork and plans to slash expenses and stop new building developments. 

A forecast for the current business year wasn’t released due to uncertainties, Son said. He noted that the second Vision Fund is on track to close soon and a third fund is being planned.

Vision Fund 2 was announced in July at $108 billion, but the reception by investors has been weak and there have been calls for a postponement. The fund’s sole major commitment on the table is SoftBank’s $38 billion pledge.

 

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