SoftBank’s Vision Fund suffers $8.9 billion loss

SoftBank’s Vision Fund suffers $8.9 billion loss

SoftBank reported its first quarterly loss in 14 years on Wednesday, whiplashed by an $8.9 billion hit at its giant Vision Fund and marking a rare, humbling moment for CEO Masayoshi Son over his backing of troubled startup WeWork.

The scale of the loss shows the risks in Son’s strategy of splashing out big on cash-burning startups. It has also cast a pall on his efforts to raise a second massive fund.

WeWork’s spectacular flame-out this year has sparked questions about Son’s judgment in backing unconventional tech founders such as WeWork’s Adam Neumann. SoftBank was forced last month to spend more than $10 billion to bail out the office-sharing startup after its IPO attempt flopped.

“My investment judgment was poor in many ways and I am reflecting deeply on that,” Son, 62, told a news conference following the results. It was a remarkable admission for an executive well known for his ebullience.

He said he had turned a blind eye to problems with Neumann in areas such as corporate governance. Nevertheless, Son was defiant that WeWork was still a solid business, saying there would be a “hockey stick” recovery in its profits eventually.

SoftBank Group Corp said its $100 billion Vision Fund contributed an operating loss of 970 billion yen ($8.9 billion) during the July-September quarter, and an unrealized loss of 537.9 billion yen for the six months of the year as the value of its tech bets such as WeWork and Uber tumbled.

Overall, the group posted an operating loss of 704 billion yen ($6.5 billion) in the July-September quarter compared to a 706 billion yen profit in the same period a year earlier and a 48 billion yen loss forecast by analysts.

It wrote down the value of its investment in WeWork by $3.4 billion in the second quarter and expected the loss to widen to $4.6 billion in the current fiscal year.

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