Japan Tech Giant SoftBank posts quarterly loss of $23 billion
TOKYO (AP) — Japanese technology company SoftBank Group posted a loss of $23.4 billion in the April-June quarter as the value of its investments fell amid global worries about inflation and interest rates. ‘interest.
SoftBank Group Corp.’s 3.16 trillion yen loss was a reversal of its profit of 762 billion yen in the same quarter a year earlier. Quarterly sales rose 6% to 1.57 trillion yen ($11.6 billion).
“I have to humbly and honestly acknowledge that things are really bad,” a gloomy chief executive, Masayoshi Son, told reporters on Monday. “I have to deal with this.”
Losses over the past six months totaled around 5 trillion yen ($37 billion), and the latest red ink was the worst quarterly loss since the company was founded, he said.
For the fiscal year that ended in March, Softbank racked up losses of 1.7 trillion yen ($13 billion), a reversal from the previous year’s profit of 4.9 trillion yen. Annual sales rose 10.5% to 6.2 trillion yen ($46 billion).
Although Softbank’s portfolio is not directly exposed to the war in Ukraine, the company warned that global uncertainty as well as inflation and soaring energy costs would likely hurt its profitability.
Much of the drop in stock value came from a drop in the price of Chinese e-commerce giant Alibaba, in which SoftBank is a major investor. The decline in the value of the yen also hurt Tokyo-based SoftBank’s bottom line, as its borrowings have to be repaid in yen.
It’s unclear how long the problems will persist, Son said, noting that it could take months or even years due to global instability and inflation.
Softbank’s planned sale of British semiconductor design and software company Arm to Nvidia fell through earlier this year. SoftBank is now promising lucrative future growth at Arm, including an initial public offering, although no date has been announced for that offering.
SoftBank acquired Arm in 2016. Arm is a leader in artificial intelligence, IoT, cloud, metaverse, and autonomous driving. Its semiconductor design is widely licensed and used in virtually all smartphones, the majority of tablets, and digital televisions. Such technology is considered essential for self-driving cars.
While Arm remains somewhat positive for SoftBank, Son said he wasn’t going to gloss over last quarter’s extremely devastating results.
Falling stock prices may seem like an opportunity to buy at bargain prices, but Son promised that SoftBank would firmly hold back on new investment, cut costs and jobs, and instead focus on the more than 470 companies in which it has already invested, mainly business-oriented. on artificial intelligence.
He declined to say how many jobs were being cut.
SoftBank also has stakes in mobile operator SoftBank, web services provider Yahoo and car rental company Didi, which has suffered from a regulatory crackdown in China. SoftBank also has funds that include other global investors called Vision Funds.
Son stressed that he still believes in the potential of the Vision Fund investments.
“We think it’s a source of great future wealth,” he said. “But we don’t really know for sure until that happens.”
He said some of the endeavors were exciting and could benefit humanity, but if dreams are pursued too recklessly there is sometimes a risk of annihilation.
“And we have to avoid annihilation at all costs,” Son said.