"Time will take care of things", SoftBank founder and Chief Executive Masayoshi Son said during an earnings briefing in Tokyo on Wednesday, during which he tried to put a silver lining on the mess his company is now on the hook for.
"Operating loss from SoftBank Vision Fund and Delta Fund was ¥572.6 billion; reflecting unrealized valuation loss (net) of ¥537.9 billion from investments held at the second quarter-end due to a decrease in the fair values of investments including Uber and WeWork and its three affiliates", SoftBank said in its results. "A big negative", Son said through an interpreter.
Son said SoftBank Group's $100 billion Vision Fund would now look to see companies list when they were closer to achieving profitability.
It was unclear precisely how SoftBank Group's listings timeline would now be governed, but Son stressed that portfolio companies would remain active in the IPO market. SoftBank marked down the value of its WeWork stake by $4.6 billion after the co-working company scrapped a planned initial stock market offering because of lackluster demand. WeWork and Uber investments led to a significant failure in recent months, and many have started questioning his judgment.
Vision Fund I posted an $8.8 billion investment loss last quarter, the presentation showed.
Broken down by company segment, SoftBank's telcos in Japan now have a cumulative 23 million subscriptions, as well as 6.16 million customers using fibre-based fixed broadband. "Cost reductions are necessary of course, but a corresponding pullback in growth makes WeWork look a lot like IWG, which is worth $4.5b, and that is even lower than the implied $8bn SoftBank just paid", said Kirk Boodry, a tech analyst at Redex Holdings who publishes on research platform Smartkarma.
Son's certitude spooked investors given the WeWork fiasco. "If SoftBank is to go on as an investment company, it needs to do a better job explaining its own governance to investors".
The Japanese group poured more than $10bn into WeWork as Mr Son backed Adam Neumann, the co-founder of the property group. As SoftBank's Marcelo Claure takes over as chairman of WeWork, the startup will get rid of unprofitable businesses, cut expenses in half and halt new building developments.
"With aid in the form of $1.5bn in warrants already issued and $5.05bn in debt, we think there should be more than enough capital to allow free cash flow to return to the black", Takahashi said.
A CapitaLand Commercial Trust spokesman said on Wednesday that a binding lease agreement for a period of seven years starting from the second quarter of 2021 has not changed.
Son pointed out that while Uber's share price has fallen recently, it has risen since SoftBank invested in it.
Son plans to keep making his investments. But some big Vision Fund investments are still performing. "The problem the fund has is that to get more investments IPO-ed, it will need a healthy US stock market".
"There's no need for me to be so overcome with regret that I wither away", Son said.