“The world is in a chaotic situation,” CEO Masayoshi Son said, citing Covid-19 and the Russian invasion of Ukraine. “In this chaotic world, the approach we should take at SoftBank is defense.”
The comment came after SoftBank reported a net loss of 1.71 trillion yen, or $13.2 billion, for the fiscal year ended March 31. That was its biggest loss for the full year, surpassing the record set two years ago, and followed by nearly ¥5 trillion net profit for the previous fiscal year.
Mr. Sun said the company has been making new investments at a slower pace this fiscal year. He forecast this year’s total to be a quarter or half the level of the previous year, when SoftBank invested about $46 billion through its Vision Fund and Latin American funds.
The company’s results tend to swing broadly as they track the volatile moves of tech stocks that SoftBank has invested in, including US companies such as Uber Technologies. company
and DoorDash company
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Interest rate increases by the Federal Reserve and other central banks, as well as tightening Chinese government regulations on the technology industry, have affected valuations of high-growth technology stocks. Former SoftBank portfolio stars such as Didi Global, the Chinese leader in car booking services company
Mr. Sun said he would choose his targets with stricter due diligence and would be eager to invest in Chinese companies.
“Because the 475 companies we’ve invested in are gradually approaching harvest season, we can survive,” said Mr. Son. “We may not be able to sow new seeds in the next year or two, but I expect the stock market will start to recover after a year or two.”
Among the many clues to the ordeal that threw SoftBank’s 117-page earnings statement, was the $26.2 billion investment loss in the first three months of this year in its major funds. These are Vision Fund 1, which has completed its investments, Vision Fund 2, which is still making new investments, and Latin American funds.
The listed shares that make up a large part of the First Vision Fund have fallen by more than half since the beginning of the year. Didi’s stock has fallen more than 80% since it debuted on the New York Stock Exchange last summer, and disagreements with Chinese regulators ensued, prompting Didi to plan to delist his name from the New York Stock Exchange.
SoftBank shares fell 8% Thursday in Tokyo trading that ended before the results were announced. Thursday’s close of 4,491 yen was less than half the level a year ago.
Another problem for Mr. Son is unwinding an arm called SB Northstar that he started in 2020 to invest in big publicly traded tech stocks. SoftBank said Thursday that Northstar has lost nearly $6 billion since its inception, and Son said the fund has mostly gone out of business.
SoftBank said the CEO contributed a portion of Northstar’s capital and will personally receive more than $2 billion.
SoftBank’s fate is no longer closely linked to the Alibaba Holding Group Ltd.
China Internet and E-Commerce Corporation.
As recently as September 2020, SoftBank’s stake in Alibaba accounted for more than half of its total asset value. As of March 31, SoftBank’s roughly one-quarter stake in Alibaba represented just 22% of its net asset value. This makes it difficult for SoftBank to use the stake as a piggy bank for other investments.
Mr. Son said he would focus on chip designer Arm, which is owned by SoftBank, as a way to make money without spending more money. He said he expects demand for chips to continue to grow. He also confirmed that Arm’s China operations are back to normal after a dispute with a former CEO who at one point left China operations without the company seal needed to do business.
SoftBank said in February that it plans to go public with Arm shares by March 2023 following a deal to sell the unit to Nvidia corp.
fell apart. Sun said the offer could be delayed by three to six months if market conditions worsen.
“We put an umbrella on when it rains,” Mr. Sun said. “We need to think flexibly, depending on the situation. But now is the time to strengthen our defense.”
write to Megumi Fujikawa at [email protected]
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