This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2019/nov/06/japanese-tech-investor-softbank-hit-by-huge-quarterly-loss-wework-uber

The article has changed 3 times. There is an RSS feed of changes available.

Version 0 Version 1
Japanese tech investor SoftBank hit by huge quarterly loss SoftBank boss takes blame for £5bn loss after WeWork investment
(about 8 hours later)
Company run by Masayoshi Son sees valuations of US firms WeWork and Uber plunge Masayoshi Son ‘reflecting deeply’ after Japanese tech investor’s first quarterly loss in 14 years
SoftBank Group, the Japanese tech investor, has slumped to a huge quarterly loss after the valuations of US companies WeWork and Uber plunged. The billionaire boss of SoftBank Group has admitted to poor judgment in trusting former WeWork chief executive Adam Neumann, after the plunging valuation of the office space company pushed the Japanese tech investor to a 704bn yen (£5bn) quarterly loss.
The company, run by billionaire investor Masayoshi Son, made an operating loss of 704bn yen (£5bn) in the three months to the end of September, in results published on Wednesday. SoftBank’s first quarterly loss in 14 years comes after a dreadful quarter for the tech companies backed by Masayoshi Son’s Vision Fund, a $100bn (£77bn) investment vehicle backed by Saudi sovereign wealth.
SoftBank’s first quarterly loss in 14 years comes after a dreadful quarter for the tech companies backed by Son’s venture capital funds, the $100bn (£77bn) Vision Fund and the smaller Delta Fund. SoftBank’s operating loss was because of the “decrease in the fair values of investments including Uber and WeWork” held by its Vision Fund, it said.
SoftBank’s operating loss was because of the “decrease in the fair values of investments including Uber and WeWork and its three affiliates” held by SoftBank’s Vision Fund and Delta Fund, it said. The two funds together made a quarterly loss of 970bn yen. “My investment judgment was poor in many ways,” said Son. “I am reflecting deeply on that.”
Son acknowledged his judgement around the $10.3bn investment in WeWork was not right, and admitted his faith in WeWork founder Adam Neumann was misplaced, in a presentation to investors on Wednesday. Son revealed he had been admonished by SoftBank board members over its $10.3bn investment in WeWork, and admitted his faith in Neumann was misplaced, in a presentation to investors on Wednesday.
Son said he turned a blind eye to Neumann’s bad side over issues such as corporate governance and that he had learned a harsh lesson, according to Reuters. He added that WeWork was not a sinking boat, despite a need to cut spending. He said: “I overestimated Neumann’s good side. I turned a blind eye to [his] bad side on things like corporate governance. I have learned a harsh lesson.”
WeWork’s parent, the We Company, was forced to abandon an initial public offering of its shares on US stock markets at the end of September after investors queried the huge valuation given to the office space rental company. SoftBank then led a $9.5bn bailout of WeWork, and founder Adam Neumann was forced out. The debacle wiped $7.8bn from WeWork’s valuation, SoftBank said. Neumann was forced out of WeWork in October, after the company – which takes long leases on buildings, invests in trendy decor and then rents out to tenants on short term agreements – was forced to abandon its plan to float on Wall St at the end of September.
Shares in Uber, which listed in May, fell to a new record low on Tuesday as it posted yet another loss, despite beating revenues estimates. Some investors in its stock market float will on Wednesday be able to sell their shares for the first time, when a lock-up period expires. Potential investors had queried the $47bn valuation given to the nine-year-old business, and raised corporate governance concerns about Neumann and his control of the company. The valuation was more than halved before it was completely abandoned. SoftBank then led a $9.5bn rescue bailout of WeWork and Neumann received an exit package worth $1.7bn.
Son’s net worth has plunged by about $6bn since July, when it peaked at about $20bn, according to the Bloomberg Billionaires Index, which tracks billionaires’ wealth. That left Son with $13.8bn on Tuesday. The company is now restructuring and up to 4,000 jobs are expected to go. The company started to tell staff in its EMEA region – Europe, Middle East and Africa – about proposed job losses on Wednesday. Up to 1,000 are expected to be made redundant in the region.
The difficult quarter could complicate Son’s efforts to raise a second Vision fund if investors question his high-risk strategy of making significant bets on high-spending, young companies. Preparations for a “full-scale launch” are still underway, SoftBank said. WeWork said it was “in conversation” with staff “as we make changes to our operating model and workforce in light of our refocused strategy”. It said it was “committed to treating our colleagues fairly and with respect”.
Son said he was hoping for a “hockey stick” recovery in profits, referring to a rapid rise after a period of stagnation. He insisted that WeWork was not a “sinking boat”, but needed to cut spending.
Shares in Uber, which listed in May and is also a Son investment, fell to a new record low on Tuesday as it posted yet another loss. Some investors in its stock market float are now able to sell their shares for the first time, as a lock-up period has expired.
Son’s personal net worth has plunged by about $6bn since July, when it peaked at about $20bn, according to the Bloomberg Billionaires Index, which tracks billionaires’ wealth.
The difficult quarter could complicate Son’s efforts to raise a second Vision Fund if investors question his high-risk strategy of making big bets on high-spending, young companies, in the hope that they can expand rapidly and dominate their sectors.
Many of the first Vision Fund’s investments are advanced technology companies such as games development platform Improbable and healthcare companies such as gene-sequencing 10x Genomics, but it also includes massive bets on more surprising sectors, such as storage company Clutter and a $300m investment in Wag, which provides dog-walking services.