SoftBank logs record loss in FY 2019 as Vision Fund investments slump

TOKYO, May 18 Kyodo - SoftBank Group Corp. on Monday reported a record net loss for the year that ended March 31, its first red ink in 15 years, as it substantially wrote off the value of its key fund's investments in startups, including U.S. co-space provider WeWork, over the coronavirus outbreak. SoftBank Group posted a group net loss of 961.58 billion yen ($9 billion), a sharp drop from the net profit of 1.41 trillion yen in the previous year. Its nearly $100 billion Vision Fund incurred a loss of 1.9 trillion yen last fiscal year from investments in a total of 88 startups such as Uber Technologies Inc., as their businesses deteriorated due to the virus spread. For the January-March quarter alone, SoftBank logged a group net loss of 1.44 trillion yen, according to Kyodo News calculation. The figure is the largest quarterly loss by a Japanese company excluding the financial sector, outstripping a 1.38 trillion yen loss reported by Tokyo Electric Power Co. in the January-March quarter of 2011 following the Fukushima nuclear crisis. "The vision fund (business) was a big minus and pulled down our operations," Chairman and CEO Masayoshi Son said at a teleconference as he reported the biggest loss since he founded the company in 1981. The company will "be more careful" and "cautious" about selecting investments in the future, he said. "I will continue to invest in companies but will not do so aggressively." He reiterated that the company will employ more outside executives to run another giant fund that SoftBank plans to launch to raise transparency. The company logged a group operating loss of 1.36 trillion yen in fiscal 2019, tumbling from a 2.07 trillion yen profit the year before. Group sales were up 1.5 percent at 6.19 trillion yen. SoftBank does not provide full-year forecasts. Among the Vision Fund's portfolio companies, We Co., operator of U.S. workspace provider WeWork, took a hit from a drop in office demand as many countries urged people to work from home amid the new coronavirus outbreak. SoftBank also saw its investment in OneWeb Global Ltd. suffer a loss after the satellite communications startup filed for bankruptcy at the end of March due to financial difficulties caused by market turbulence. Softbank Group has shifted its business focus to investment from telecommunications service operations. Son has called his company a "hunter" of unicorns, or unlisted start-ups valued at more than $1 billion. The company booked a special profit of 1.22 trillion yen from selling part of its stake in Chinese e-commerce giant Alibaba Group Holding Ltd., its major profit driver, in fiscal 2019 but it was not enough to make up for its investment losses. SoftBank Group also said Monday that Alibaba co-founder Jack Ma will retire from its board after a 13-year stint that began in June 2007. Ma's request to resign is subject to shareholder approval at a June 25 meeting, it said. "He told me that the decision is part of his life policy to no longer engage in the front line of management" since his retirement as Alibaba chairman in September last year, Son said. "It's disappointing but our friendship will continue for the rest of our lives." ==Kyodo