SoftBank Warns of US$13 Billion Loss Due to COVID-19By MBN Staff | Tue, 04/14/2020 - 13:23
COVID-19 claimed its first tech giant victim. Yesterday, SoftBank, the world’s biggest technology investor through its US$100 billion Vision Fund, estimated a record US$13 billion full-year loss, dragged down by its fund. The Japanese conglomerate blamed the poor performance on a "deteriorating market environment" hammered by the COVID-19 outbreak.
This will drag the entire group to its largest annual loss, underscoring the need for a plan to raise up to ¥4.5 trillion (US$42 billion) through asset sales. Last week, WeWork sued SoftBank alleging the investment group violated its contractual obligations by backing out of a US$3 billion rescue plan. Just a few days after, Softbank said it was no longer planning to buy WeWork shares to shore up its finances.
SoftBank is dependent on its dividends for cash flow, leaving its 26 percent stake in Alibaba Group the most likely to be sold down or monetized, UBS analyst Kei Takahashi wrote in a client note.
Softbank’s Chief Executive Masayoshi Son is under pressure from activist investor Elliott Management to improve shareholder returns. The Vision Fund recorded a loss of around ¥800 billion (US$7.47 billion) in nine months to December last year. Among the startups that Softbank has invested in are Uber Technologies, DiDi and T-Mobile.