Japanese tech giant SoftBank posted a quarterly loss of $23 billion

TOKYO >> Japanese technology company SoftBank Group posted a loss of US$23.4 billion for the April-June quarter as the value of its assets fell amid global inflation and interest rate concerns.

The loss of SoftBank Group Corp. of 3.16 trillion yen was a reversal of earnings of 762 billion yen in the same quarter last year. Quarterly revenue rose 6% to 1.57 trillion yen ($11.6 billion).

“I have to humbly and honestly admit that things are really bad,” a somber Chief Executive 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 figures were the company’s worst quarterly losses since its inception, he said.

For the fiscal year ended March, Softbank posted losses of 1.7 trillion yen ($13 billion), a reversal of the 4.9 trillion yen profit a year earlier. Annual sales rose 10.5% to 6.2 trillion yen ($46 billion).

Although Softbank’s portfolio isn’t directly exposed to the war in Ukraine, the company warned that global uncertainty, as well as inflation and rising energy costs, would likely hurt its profitability.

Much of the stock’s decline is due to a decline in Chinese e-commerce giant Alibaba, in which SoftBank is a major investor. The falling yen also hurt Tokyo-based SoftBank’s bottom line as its loans are required to be repaid in yen.

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

Softbank’s intended sale of British semiconductor and software design company Arm to Nvidia fell through earlier this year. SoftBank is now promising lucrative future growth at Arm, including an IPO, although a date for that IPO has not yet been announced.

SoftBank acquired Arm in 2016. Arm is a leader in artificial intelligence, IoT, cloud, metaverse and autonomous driving. Its semiconductor design is widespread and used in virtually all smartphones, most tablets and digital televisions. This technology is considered the key to autonomously driving cars.

While Arm remains positive about SoftBank, Son said he would not sugarcoat last quarter’s overwhelmingly dismal results.

Lower share prices appear to be an opportunity to buy at bargain prices, but Son promised SoftBank would exercise firm restraint on reinvesting, cutting costs and jobs and instead focusing on the more than 470 companies it has already invested in, mostly companies above artificial intelligence.

He declined to say how many jobs will be cut.

SoftBank also owns stakes in mobile phone provider SoftBank, web service provider Yahoo and rental car company Didi, which has suffered from a government crackdown 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 future great wealth,” he said. “But we won’t know for sure until it happens.”

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

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

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