Japanese technology firm SoftBank Group posted a $23.4 billion loss in the April-June quarter as investment values fell amid global inflation and interest rate concerns.
Loss of SoftBank Group. The profit of 3.16 trillion yen was a reversal of the profit of 762 billion yen in the same period last year. Quarterly earnings rose 6% to 1.57 trillion ($11.6 billion).
“I must humbly and honestly acknowledge that things are really bad,” a somber Chief Executive Masayoshi Son told reporters Monday. “I must face up to this.”
Losses for the last six months totaled about 5 trillion yen ($37 billion), and the latest red ink was the worst quarterly loss since the company’s founding, 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 4.9 trillion yen profit for the previous year. Annual sales grew 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 dip in the value of shares came from a drop in the price of Chinese e-commerce giant Alibaba, in which SoftBank is a major investor. The declining value of the yen also hurt Tokyo-based SoftBank’s bottom line because its borrowings must be repaid in yen.
How long the problems will persist is unclear, Son said, noting it could be months or even years because of global instability and inflation.
Softbank’s intended sale of British semiconductor and software design company Arm to Nvidia failed earlier this year. SoftBank is now promising lucrative future growth at Arm, including an initial public offering, although a date has not been announced for that offering.
SoftBank acquired Arm in 2016. Arm is a leader in artificial intelligence, IoT, cloud, the metaverse and autonomous driving. Its semiconductor design is widely licensed and used in virtually all smartphones, the majority of tablets and digital TVs. Such technology is considered key for autonomous driving cars.
Though Arm remains a bit of a positive for SoftBank, Son said he was not going to gloss over the overwhelmingly devastating results for the latest quarter.
Lower share prices might appear to be an opportunity to buy at bargain basement prices, but Son promised SoftBank will firmly hold back on new investments, cut costs and jobs, and instead focus on the more than 470 companies it’s already invested in, mostly companies focused on artificial intelligence.
He declined to say how many jobs were being reduced.
SoftBank also owns stakes in mobile phone provider, SoftBank and web service provider Yahoo, as well as car rental company Didi, which has struggled with government crackdowns in China. SoftBank also has a fund that includes other global investors called the Vision Fund.
