SoftBank takes $6.6B hit on WeWork

SoftBank slopped more red ink onto fiscal-year guidance as the calamitous investment in WeWork, an office-sharing startup, continues to haunt shareholders.

The company now forecasts a net loss of 900 billion Japanese yen (US$8.4 billion) for the 12 months to March 31, up from the JPY750 billion ($7 billion) net loss it was predicting only a couple of weeks ago.

SoftBank previously thought that non-operating losses would be around JPY800 billion ($7.5 billion), but now it thinks a more realistic figure is north of JPY1 trillion ($9.4 billion).

WeWork is to blame for much of the balance-sheet carnage. Of the expected $9.4 billion non-operating loss, WeWork's total write-down, which includes investments and loan commitments, accounts for JPY700 billion ($6.6 billion).

Masayoshi Son, SoftBank's flamboyant CEO, recently admitted that his judgment was flawed over WeWork, but that will be scant consolation for shareholders. SoftBank has reportedly shoveled more than $13.5 billion into the startup.

"Every write-down takes WeWork's carrying value closer to reality," said Kirk Boodry, an analyst at Redex Holdings quoted by Reuters. "Clearly the value is zero."

WeWork is one of a series of investment misfires for the $100 billion Vision Fund assembled by Son in partnership with Saudi Arabia. Others include would-be satellite operator OneWeb, which has filed for bankruptcy. Brandless, which was looking to sell environmentally conscious household goods, has shut down.

Son's investments in hotel-booking service Oyo Hotels & Homes and Uber have also failed to live up to expectations.

COVID-19 and lockdown measures haven't helped Vision Fund performance, but Son has also attracted criticism for making huge and high-risk punts on young tech companies.

SoftBank's guidance for operating losses in fiscal 2020 remains the same at JPY 1.35 trillion ($12.6 billion).

— Ken Wieland, contributing editor, special to Light Reading