- SoftBank reported a quarterly loss amounting to billions of dollars for the first time in more than a decade.
- WeWork is not the only problematic investment SoftBank made recently.
- The investment group has prioritized fast growth over profits.
SoftBank’s longtime strategy of inundating startups with cash hoping for a big payoff has been a spectacular failure. Now the Japanese investment group’s Chairman and CEO, Masayoshi Son, has laid the blame squarely on his ‘judgment’.
“There was a problem with my own judgment, that’s something I have to reflect on.”
Specifically, Son revealed that he had ignored problems in how WeWork was governed.
First Quarterly Loss in Over a Decade
SoftBank recently posted its first quarterly loss in 14 years, raising alarm among investors. The loss was to a large extent caused by WeWork as the write-down in the shared-office startup comprised more than half of the financial hit SoftBank suffered.
In the July to September quarter, SoftBank Group recorded an operating loss of $6.46 billion. In the same quarter a year ago, the conglomerate posted a profit of $6.48 billion. The loss was around 15 times what analysts had been forecasting. Per Refinitiv, a loss of $440 million was being projected for the quarter.
Specifically, SoftBank wrote down its WeWork investment by $3.4 billion, indicating that the shared-office startup’s contribution to the loss was slightly over 52%. To make matters worse, SoftBank expects the loss to grow by over 35% to reach $4.6 billion this fiscal year.
Besides the write-down in its WeWork investment, SoftBank was also forced to fork out over $10 billion in a bail-out of the shared-office firm. SoftBank also had to force a leadership change at WeWork and lay off some employees.