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SoftBank has reported a quarterly investment loss of $5.5bn as the technology conglomerate cuts back on pouring money into start-ups to navigate a global tech rout and higher borrowing costs.
In recent quarters, SoftBank has emphasised the group’s shift to a more “defensive” position with its emphasis on piling up and retaining cash — a message to reassure investors worried about its high leverage in the wake of the rise in global interest rates.
That transition has also involved Masayoshi Son, its billionaire founder, abandoning his signature, bullish presentation to investors as he focuses on listing the UK chip designer Arm, which is owned by the Japanese group.
For the October to December quarter, SoftBank reported an investment loss of ¥731.94bn ($5.5bn), compared with ¥1.38tn in the previous quarter for its two Vision Funds and a fund investing in start-ups in Latin America.
During the three months, the company generated a net loss of ¥783.41bn. Analysts had forecast a profit of ¥103.59bn, according to S&P Global Market Intelligence.
In the previous quarter, the company had logged a massive net profit of ¥3tn but that was mainly as a result of its historic selldown of its stake in Chinese ecommerce group Alibaba.
Kirk Boodry, analyst with Redex Research, said it would probably take time for market perceptions on SoftBank and its Vision Funds to improve, making it difficult for them to expand investments in the near future.
“In order to be more proactive and aggressive with investing, they need money. The initial public offering of Arm is the quickest way for them to monetise but beyond that, there are not a lot you can sell within the Vision Fund because many of the investments are under water,” Boodry added.