SoftBank Suffers $6.2B Loss Amidst WeWork Woes and Tech Investment Declines

TOKYO — SoftBank Group Corp. SFTBF, the Japanese technology conglomerate, faced a staggering $6.2 billion loss in the recent July-September quarter as key technology investments stumbled, particularly the office-sharing giant WeWork WEWOW. A stark contrast to the same period in the previous year, SoftBank's financials revealed a downturn from a substantial 3 trillion yen profit to a loss of 931 billion yen ($6.2 billion).

Venturing into Volatility: The Ups and Downs of SoftBank's Investments

SoftBank's expansive investment portfolio, which fluctuates with market conditions, has culminated in a notoriously volatile track record. This unpredictability has been underscored by WeWork's filing for Chapter 11 bankruptcy protection. WeWork's struggles highlight broader distress within the U.S. commercial real estate sector, which has seen a spike in vacancies exacerbated by the pandemic's aftereffects, particularly in metropolises like New York and San Francisco.

In the wake of WeWork's difficulties, SoftBank, which holds an approximate 80% stake in the company, accrued a loss of 234 billion yen ($1.5 billion) attributable to the coworking firm alone. As the first telecom operator to introduce the iPhone to Japan, SoftBank is no stranger to making waves in the tech world. Nevertheless, the company is reeling from the recent upset.

Amid shareholders' concerns, Yoshimitsu Goto, CFO of SoftBank, addressed the resulting apprehension in an online news conference. He emphasized SoftBank's continued strength and commitment to judicious investing, stating that steps are being taken to review and reinforce strategies following the WeWork debacle. Goto qualified that optimism by acknowledging the 'regrettable' circumstances around WeWork and expressed intent to apply the learned lessons to future endeavors with the Vision Fund.

Mixed Moves: SoftBank's Varied Investment Outcomes

One spark of promise amidst the gloom comes from the Nasdaq IPO of Arm, a British semiconductor and software design firm acquired by SoftBank in 2016. While the listing did not directly influence the quarterly earnings, the company recorded a substantial $47 billion as capital surplus.

The conglomerate's quarterly sales reflected a minor uptick, inching forward to 1.67 trillion yen ($11 billion) from 1.61 trillion yen, although SoftBank abstains from disseminating full-year predictions. The corporation's past includes hefty stakes in major players like Amazon, Meta Platforms META, and Alphabet, all of which have been divested in recent years to weather tougher times. Their downsizing approach also led to the liquidation of their investment in Uber Technologies UBER, and a significant reduction in their stake with Chinese e-commerce giant Alibaba Group Holding Limited BABA.

Despite the unsettling financial outcomes, SoftBank Group Corp. shares experienced a modest surge of 1.1% on the Tokyo Stock Exchange.

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