SoftBank Group posted an unexpected 931 billion yen ($6.2 billion) net loss in the second quarter, compounding the pain for shareholders and founder Masayoshi Son after one of the group’s biggest bets, WeWork, filed for bankruptcy earlier this week, a media report said.
It was the fourth consecutive quarter in the red for the Japanese conglomerate, as gains from the initial public offering of chip designer Arm failed to offset pain from the weak yen and worse than expected writedowns in private market valuations in the three-month period ending September, Financial Times reported.
Analysts had expected a net profit of 180.8 billion yen, according to S&P Capital IQ. The group had made 3 trillion yen in net profit in the same quarter last year after selling a stake in Chinese e-commerce group Alibaba, the report said.
“It was a disappointing quarter. We didn’t expect them to take impairment charges for private investments and at a higher rate than the last quarter,” said Kirk Boodry, a SoftBank analyst at Astris Advisory in Tokyo, highlighting $2.9 billion of writedowns in the private portfolio at the group’s flagship Vision Funds, Financial Times reported.
“There was an expectation when they took some pretty steep writedowns in the fourth quarter that they had sort of kitchen-sinked everything,” Boordy added.
SoftBank said on Thursday that after some accounting adjustments, its tech-heavy Vision Funds made an overall investment gain of $300 million in the second quarter — with Vision Fund 1 making a gain of $2.5 billion on the back of selling its stake in Arm to SoftBank, but Vision Fund 2 fell to a $2.1 billion loss.
Its LatAm Funds also made a $100 million loss, Financial Times reported.
The Vision Funds’ public portfolio lost value in the second quarter for the first time in 12 months, according to Boodry, driven by a reversal in fortunes for logistics companies such as warehouse robotics group AutoStore, as well as consumer fintech Better, after it listed through a merger with a special purpose acquisition company in August.
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