SoftBank Warns of Huge Losses as Vision Fund Value Collapses

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The Japanese company said it expects an operating loss of 1.35 trillion yen ($ 12.5 billion) in its fiscal year until March 31, 2020. This compares to a profit operating income of more than 2 trillion yen the previous year.

“The difference in operating income is mainly due to the expected registration of [an] investment loss of about 1.8 trillion yen [$16.7 billion] at SoftBank Vision Fund … resulting from a decrease in the fair value of investments due to the deterioration of the market environment, ” SoftBank ((SFTBF) said in a statement.

Large losses on other SoftBank investments held outside the $ 100 billion Vision Fund, including bankrupt Internet internet startup OneWeb and struggling coworking provider WeWork, are also expected to weigh heavily on profits, a- he added.

Vast restrictions on work, travel and social distance to fight the coronavirus pandemic have put pressure on SoftBank’s global technology portfolio, which also includes Uber ((UBER), Didi, OYO and Grab.

SoftBank founder and CEO Masayoshi Son, who introduced himself as a bold and visionary investor, was forced to play the defense after some of his biggest bets have collapsed. Last month, he made a surprise announcement of what amounts to a $ 41 billion asset sale to buy SoftBank stocks and reduce the company’s heavy debt load.

With the huge Vision Fund, Son and his company have been able to take significant stakes in flashy tech startups working on carpooling, robotics, agriculture and other fields that he believes were essential to shaping the future. . By cutting large checks, often totaling hundreds of millions, even billions of dollars, the fund could help startups grow quickly and sometimes greatly increase their valuations.

But even before the recent market turbulence around the coronavirus pandemic, sirens were blinking around certain SoftBank bets.

Two of SoftBank’s largest investments – Uber and WeWork – both faced large receptions on Wall Street, largely due to concerns about their large losses. Uber was clubbed by investors after its IPO and continues to trade well below its IPO price. WeWork attempted and failed to withdraw a takeover bid and demanded a bailout from SoftBank. (SoftBank recently moved away from part of the WeWork rescue program.)

In total, more than 7,300 people lost their jobs in a dozen startups supported by SoftBank during the four months ending in February, according to a count by CNN Business.

However, Son has moved forward with plans for a second Vision Fund. But as he said in February, “I think our next fund size should be a little bit smaller, because we have caused many people to worry and worry. “

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