Japanese tech giant SoftBank posts $23 billion quarterly loss

TOKYO — Japanese tech firm SoftBank Group posted a $23.4 billion loss in the April-June quarter as the value of its investments fell amid global concerns about inflation and interest rates.

SoftBank Group Corp.’s loss of 3.16 trillion yen. was a reversal from the profit of 762 billion yen in the same quarter a year earlier. Quarterly sales rose 6% to 1.57 trillion yen ($11.6 billion).

“I have to humbly and honestly admit that things are going really bad,” a gloomy CEO Masayoshi Son told reporters on Monday. “I have to face this.”

Losses over the past six months totaled about 5 trillion yen ($37 billion), and the latest red ink was the worst quarterly loss since the company was founded, he said.

For the fiscal year ended March, Softbank posted a loss of 1.7 trillion yen ($13 billion), a reversal from the previous year’s profit of 4.9 trillion yen. Annual revenue grew 10.5% to 6.2 trillion yen ($46 billion).

While Softbank’s portfolio has not been directly exposed to the war in Ukraine, the company warned that global uncertainty, as well as inflation and rising energy costs, would likely hurt profitability.

Much of the fall in stock value came from a fall in the price of Chinese e-commerce giant Alibaba, in which SoftBank is a major investor. The yen’s declining value also hurt SoftBank’s earnings in Tokyo, as its yen-denominated loans must be repaid.

How long the problems will last is unclear, Son said, noting that it could take months or even years due to global instability and inflation.

Softbank’s proposed sale of British semiconductor and software design company Arm to Nvidia failed earlier this year. SoftBank is now promising lucrative future growth at Arm, including an initial public offering, although no date has been announced for that offering.

SoftBank acquired Arm in 2016. Arm is a leader in artificial intelligence, IoT, cloud, the metaverse and autonomous driving. The semiconductor design is widely licensed and used in virtually all smartphones, most tablets, and digital TVs. Such technology is considered essential for autonomous driving cars.

While Arm remains somewhat positive for SoftBank, Son said he wouldn’t cover up the overwhelmingly devastating results for the last quarter.

Lower stock prices may seem like an opportunity to buy at spot prices, but Son promised SoftBank will hold back vigorously on new investments, cut costs and jobs, instead focusing on the more than 470 companies it has already invested in, mainly on companies focused on artificial intelligence.

He would not say how many jobs will be cut.

SoftBank also owns interests in the mobile carrier SoftBank, Yahoo web service provider and vehicle rental company Didi, which has suffered a crackdown from regulatory authorities in China. SoftBank also has funds that include other global investors called Vision Funds.

Son emphasized that he still believes in the potential of the Vision Fund’s investments.

“We believe this is a source of great future wealth,” he said. “But we won’t really know for sure until it happens.”

He said some of the businesses were exciting and could benefit humanity, but if dreams are pursued too recklessly, there is sometimes a risk of destruction.

“And we must avoid destruction at all costs,” Son said.


Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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