Business & Tech

Softbank Group takes a $2-billion hit from bad bets

Softbank Group CEO Masayoshi Son attends a press conference to announce the company's financial results for the nine months to December 2019, in Tokyo on February 12, 2020. - Major Japanese technology investor SoftBank Group said on February 12 its net profit plunged nearly 70 percent for the nine months to December as investments in sharing economy companies including WeWork and Uber took a hit. (Photo by STR / JIJI PRESS / AFP) / Japan OUT (Photo by STR/JIJI PRESS/AFP via Getty Images)
Masayoshi Son, SoftBank Group’s founder and chief executive, played down concerns about SoftBank’s future, dismissing worries about its enormous corporate debts and its under-performing investments.

TOKYO — SoftBank Group has taken another multibillion-dollar hit from its ambitious but costly bets on once high-flying companies like Uber and WeWork, putting growing pressure on the Japanese conglomerate to get its financial house in order.

The company and its founder and chief, Masayoshi Son, have dominated the world of technology investment through the $100 billion Vision Fund. More recently, the company has become a target for the hedge-fund giant Elliott Management, which has been urging changes at the Japanese firm, including governance overhauls and stock buybacks.

On Wednesday, SoftBank may have given Elliott another reason to complain. It said the Vision Fund and other investments cost its bottom line $2 billion in the final three months of 2019.

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Overall, SoftBank reported a profit of about $501 million for the quarter, well short of what investors had expected. Its profit was less than one-tenth of what it had posted one year earlier. Its operating profit fell 99 percent.

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In a presentation to investors and analysts Wednesday, Son suggested that he would slow the Vision Fund’s torrential pace of fundraising and investing.

Asked about the status of raising money for a planned $108 billion second iteration of the Vision Fund, Son said that SoftBank’s recent challenges had “caused concerns among potential investors,” adding that he had “received a lot of feedback from people, and we are actively engaging in discussions.”

Son said that SoftBank would continue making new investments.

“Once potential partners are more comfortable,” he added, “they will join us.”

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Despite the huge losses, Son did not appear chastened. Instead, he played down concerns about SoftBank’s future, dismissing worries about its enormous corporate debts and its underperforming investments in a number of quixotic tech firms.

Focusing on the positive, he cited SoftBank’s victory in the United States this week related to Sprint, the US wireless carrier that the company has spent heavily to support.

On Tuesday, a judge approved a merger between Sprint and T-Mobile, another US wireless carrier, to form a more powerful competitor to rivals like AT&T and Verizon.

The deal is one of the few bright spots in what has been a tough year for SoftBank.