SoftBank announces loss while Vision Fund sees first profit in five quarters.

SoftBank announces loss while Vision Fund sees first profit in five quarters.

SoftBank Group Reports Loss, While Vision Fund Shows Promise

SoftBank Group Corp, one of the largest technology investment companies in the world, recently reported a loss for the quarter ended June, which surprised many in the market who had expected better results. However, despite this setback, the company’s Vision Fund investment arm managed to post a gain, defying expectations of further losses for the fund.

SoftBank Group recorded a net loss of 477.6 billion yen, equivalent to approximately $3.3 billion. This figure was significantly lower than the 75 billion yen expected by Refinitiv analysts. However, it still marked a significant improvement compared to the 3.16 trillion yen loss recorded in the same quarter of the previous year.

In contrast, the SoftBank Vision Fund, which has typically performed poorly in recent quarters, managed to achieve a profit of 159.8 billion yen, approximately $1.1 billion, during the quarter ended in June. This was a surprising turnaround as analysts had anticipated further losses. Notably, SoftBank experienced losses of $32 billion in the last quarter, primarily due to the financial performance of Indonesian e-commerce and ride-hailing company GoTo, as well as Chinese AI company SenseTime.

Over the past two years, the SoftBank Vision Fund has accumulated cumulative losses of ¥6.9 trillion, around $48 billion. As a response to this, the company has decided to suspend new investments and reduce its stake in Alibaba. Moreover, SoftBank no longer holds any stake in Uber after initially investing in the ride-hailing giant in 2018 and subsequently selling nearly a third of its stake. In fact, SoftBank has recently confirmed that it has completely offloaded its Uber holdings, a move aimed at managing its financial health amidst continuous losses.

SoftBank Shifts from Defense to Offense

Despite these setbacks, SoftBank CEO Masayoshi Son indicated during a shareholder meeting in June that the company is entering a new phase. Son stated that SoftBank has transitioned from “defense mode” to “offense mode” and is now financially prepared to embark on new endeavors. He highlighted the increase in the company’s cash reserves, which now amount to five trillion yen ($35.3 billion). Son expressed his excitement about this newfound strength, signaling a change in strategy for the company.

SoftBank has faced significant challenges recently as the value of its investments did not materialize as expected. In response, a top SoftBank executive, Rajeev Misra, stepped down from his multiple roles within the company last year. Misra was the CEO of SoftBank Global Advisors, which oversees Vision Fund 2, one of the funds under the SoftBank Vision Fund umbrella. His departure came amidst mounting pressure from the fund’s performance, with declining stock prices and underperforming investments.

Looking ahead, the market is closely watching SoftBank’s upcoming initial public offering (IPO) for its chip designer subsidiary, Arm Ltd. Arm recently decided to bypass the UK market and focus solely on a US-only listing. This decision was made after discussions with the British government did not yield favorable results. Now, Arm is aiming for a valuation of $70 billion, potentially making it the largest IPO in 2023.

In conclusion, SoftBank’s recent financial results displayed a mixed performance, with the group reporting overall losses while its Vision Fund demonstrated signs of improvement. As the company enters “offense mode,” it will be interesting to observe how SoftBank navigates the market and utilizes its cash reserves to pursue new opportunities. The upcoming IPO of Arm Ltd. will also play a crucial role in shaping SoftBank’s future trajectory within the technology investment landscape.