Masayoshi Son, CEO of Japan’s Softbank Group was forced to strike a humble tone after the mobile telecom and investment firm announced its first quarterly loss in 14 years on Wednesday. The company reported its quarterly financial statement for the July 1 ~ September 30 period and announced that it had lost $6.45 billion USD after massive write offs of investments in ride-hailing app, Uber, and the office space startup, WeWork.
In October, Softbank agreed to a $9.5 billion USD package to rescue WeWork after the company failed to complete an IPO in September and a cash crunch that saw the company running out of its available working cash in November.
Softbank told its investors on Tuesday that it had taken a $4.6 billion USD charge on WeWork alone and that the company also lost money on its investment in ride-sharing group Uber, whose share price has slumped below its IPO price and hit an all-time low on earlier this week.
The Softbank Vision Fund had planned to launch a new $108 billion USD as a successor to its earlier $100 billion USD Vision Fund but the new Vision Fund is at risk as investors place increased scrutiny at Softbank and its investments and their returns.
If WeWork had completed its IPO in September, the company would have been valued at $47 billion USD, but the company’s value is now considered to be less than $5 billion USD. WeWork has been aggressive in adding new Co-Work Spaces (CWS) into its portfolio but its business model has been called into question.
Because of the dramatic decrease in the company’s value, many investors were dismayed when Softbank agreed to pay WeWork founder Adam Neumann a $1.7 billion USD exit package. They believe that Masayoshi Son has a blind spot for the WeWork founder and they believe that if Neuman had walked away with $100 million USD (or less) that it would have been appropriate.
During the press conference announcing the 3rd quarter results, Son said, “My investment judgment was poor in many ways, and I am reflecting deeply on that.”