SoftBank has lost a cumulative amount of $14.3 billion through its equity and debt investments in WeWork, the Japanese technology conglomerate's management revealed in a post-earnings call days after the portfolio company, which was once valued at $47 billion, filed for Chapter 11 bankruptcy in the US.
"We were very sorry to hear about the bankruptcy. We need to accept this reality and learn lessons from it for our future investment activity. What went wrong is homework for us," SoftBank Group CFO Yoshimitsu Goto said after the tech giant posted its September quarter results.
"We have been valuing WeWork very conservatively. So, there is no surprise for us (in terms of impact on SoftBank's financials in the last quarter)," he added.
Asked about SoftBank supremo Masayoshi Son's role and responsibility in the WeWork debacle, Goto said that while Son was ultimately involved in all the decisions as the chief executive officer, the lessons are there to learn for SoftBank as a whole.
SoftBank Vision Funds (SVF) suffered an investment loss of $3.86 billion (excluding gains on bets in subsidiaries) in the six months ended September, owing to lower share prices of its listed portfolio companies and a decrease in the fair values of its private portfolio companies.
SVF registered an investment loss of $3.7 billion in the September quarter, which was a large improvement from its $9.5 billion loss in the corresponding quarter of last year, but substantially worse than its $86 million in the June quarter of this year.
At a segmental level, SVF recorded a $1.2 billion gain on investments which included gains associated with SVF’s investments in Arm and other subsidiaries of the SoftBank group.
Although SoftBank has resumed investing activities significantly in the last couple of quarters, it is still far off from betting billions of dollars at one go which had become its trademark style a few years ago.
It invested $1.5 billion in the September quarter, $1.8 billion in the June quarter and the three proceeding quarters saw bets of $500 million each.
"When the opportunity comes up, the ticket sizes may get bigger. We are very selective when it comes to investment opportunities... We have plenty of cash and are ready for whatever big opportunity may come," Goto said.
The question of Israel
When asked about the company's strategy in Israel going forward due to the ongoing geopolitical turmoil in the region, SoftBank management said that it had invested in a cybersecurity company in the country in the September quarter.
"We continue to look for artificial intelligence disruptors all across the globe. Of course, there is a lot of human tragedy there... We have a long term investment horizon... We will continue back companies that do well regardless of where they are," said Navneet Govil, executive managing partner and chief financial officer of SoftBank Vision Fund.
The SoftBank management also talked at length about its thesis and bets on AI. However, it declined to comment on reports of Masayoshi Son, OpenAI CEO Sam Altman and famed former Apple designer Jony Ive coming together to start a hardware company in the AI space.
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