SoftBank’s $6.3B Loss: Is the Dream Over?

The Japanese telecommunications firm SoftBank has unexpectedly posted a quarterly loss for the past two quarters in a row. The company plans to continue investing in artificial intelligence (AI) despite this setback and even further explore the potential of this game-changing technology. The quarterly loss, the success of the Vision Funds, and the company’s concentration on AI investments are all topics we’ll cover in this article about SoftBank.

The combined quarterly investment loss for SoftBank’s Vision Funds was 13 billion yen ($91 million). This includes the Vision Funds 1 and 2, as well as the Latin American fund. This loss compares favorably to last year’s calamity, when it was 2,919 billion yen ($20 billion). Investment analysts were expecting SoftBank to return to profitability, so the company’s net loss of 477.6 billion yen ($3.3 billion) during the quarter came as a surprise.

Losses of 38.749 billion yen and 46.860 billion yen were recorded for the company’s Vision Funds 1 and 2, respectively, during the third quarter. Alternatively, the Latin American fund saw a gain of 47.496 trillion yen. One of SoftBank’s portfolio companies, Pismo, was sold to Visa for $1 billion in June, contributing to a boost in business in Latin America.

SoftBank lost a total of 699 billion yen (roughly $4.9 billion) on its investments during the quarter. Investments in companies like Alibaba, Deutsche Telekom, and T-Mobile US saw their share prices fall, exacerbating the decline.

Despite the quarterly loss, SoftBank is continuing to put money into artificial intelligence projects. The company anticipates that AI will play an increasingly important role in propelling innovation across many sectors. SoftBank will “keep focusing on the AI trend,” as stated by CFO Yoshimitsu Goto: “We are carefully and slowly moving back to investment activities.”

Together, SoftBank’s Vision Funds 1 and 2 and its LatAm fund have received commitments totaling $166.2 billion. The current fair value of the assets is $140.3 billion, while the company’s acquisition costs are calculated at $146.6 billion.

With an initial investment size of nearly $90 billion, SoftBank’s first Vision Fund has made significant progress. Approximately $37.5 billion in private companies, $20.5 billion in public companies, and $44.2 billion in exits make up the “fair value” of the 94 investments made from this fund. The fair value of Vision Fund 2’s investments, which has a size of $108 billion, is currently at $32.2 billion.

SoftBank anticipates that Vision Fund 2, despite being in its infancy, will become the company’s primary investment vehicle going forward. The firm continues to look for ways to grow its portfolio and is confident in the long-term prospects of its Vision Funds.

Recent strategic moves by SoftBank show the company is serious about artificial intelligence. The Japanese arm of the company, also called SoftBank, has just begun operations under the brand name SB Intuitions. This business endeavor has set out to create a Large Language Model and generative AI services tailored to the needs of Japanese consumers and companies.

In addition, Symbotic, an artificial intelligence (AI) warehouse logistics and robotics company, received a sizable investment from SoftBank in July. As further evidence of its commitment to fostering the AI ecosystem, the company set up a joint venture to develop services for third parties.

SoftBank acknowledges that AI has the potential to revolutionize business processes all over the world. The company’s long-term goals are best reflected in its strategic AI investments. SoftBank’s mission is to improve the world by using AI to advance business, consumer, and societal well-being.

SoftBank is unfazed by the quarterly loss and is slowly resuming investment activities. The company is keeping its eye on the artificial intelligence (AI) trend and looking for ways to cash in on its potential as it navigates the ever-changing investment landscape.

SoftBank is demonstrating its resolve to play a central role in shaping the future of technology through its commitment to its Vision Funds and strategic moves in the AI landscape. SoftBank is poised to lead the AI revolution thanks to its global reach and diversified investment portfolio.

First reported on TechCrunch

Frequently Asked Questions

1. Why did SoftBank post a quarterly loss for two consecutive quarters?

SoftBank unexpectedly posted a quarterly loss due to combined investment losses from its Vision Funds, which amounted to 13 billion yen ($91 million). This came as a surprise to investment analysts who were expecting the company to return to profitability.

2. What were the specific losses and gains recorded for SoftBank’s Vision Funds and investments?

During the third quarter, Vision Fund 1 and 2 experienced losses of 38.749 billion yen and 46.860 billion yen, respectively. However, the Latin American fund saw a gain of 47.496 trillion yen. The sale of portfolio company Pismo to Visa contributed to a boost in business in Latin America.

3. Despite the losses, why is SoftBank continuing to invest in artificial intelligence (AI)?

SoftBank sees AI as a crucial driver of innovation across various sectors and believes in its long-term potential. The company intends to focus on AI projects and views AI as an important trend for the future.

4. What is the status of SoftBank’s Vision Funds and their investments?

Combined commitments for Vision Funds 1 and 2 and the LatAm fund total $166.2 billion. The current fair value of the assets is $140.3 billion, with acquisition costs calculated at $146.6 billion. Vision Fund 1’s investments have reached $102.2 billion in fair value, while Vision Fund 2’s investments stand at $32.2 billion.

5. How is SoftBank demonstrating its commitment to artificial intelligence (AI)?

SoftBank is taking strategic steps in the AI landscape. The company has launched SB Intuitions, focusing on creating Large Language Models and generative AI services for Japanese consumers and companies. SoftBank has also invested in Symbotic, an AI warehouse logistics and robotics company, and established joint ventures for third-party AI services.

6. How does SoftBank view the potential of AI?

SoftBank recognizes AI’s potential to revolutionize global business processes and is committed to leveraging AI to improve various aspects of business, consumer experiences, and societal well-being.

7. How is SoftBank responding to the quarterly loss and its investment strategy?

Despite the loss, SoftBank remains steadfast and is resuming investment activities. The company is monitoring the AI trend and seeking opportunities to harness its potential for future growth.

8. How is SoftBank positioned in the AI landscape and technology sector?

SoftBank aims to play a central role in shaping the future of technology. With its global reach, diverse investment portfolio, and commitment to AI through its Vision Funds and strategic moves, SoftBank is poised to lead the AI revolution and make significant contributions to the tech industry.

Featured Image Credit: Unsplash; Owen Beard