SoftBanks damage from Uber, WeWork likely to exceed $5 billion

Galtero Lara
Octubre 9, 2019

In an interview with Nikkei Enterprise on Monday, the Jap neighborhood's chief executive Masayoshi Son spoke out about the investment debacles his conglomerate has been fascinated about, particularly Uber and WeWork.

Sanford C. Bernstein & Co. estimates that Vision Fund's writedown alone could be as much as $5.93 billion, with another $1.24 billion drop for the portion of WeWork owned by SoftBank Group.

"Profits in the [SoftBank Vision Fund] segment may still see considerable volatility ahead", Mitsubishi UFJ analyst Hideaki Tanaka wrote.

SoftBank's performance is increasingly tied to the fortunes of these unproven startups, with the company likely to report chunky writedowns on many investments for the quarter ended September. He said his estimates represent a worst-case scenario and may be offset by gains from other unlisted companies.

SoftBank Group 9984.T founder and CEO Masayoshi Son is "embarrassed and flustered" by his track record, he told Nikkei Business magazine, as the Japanese company comes under pressure from some investors for its bets on loss-making businesses.

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"The outcomes silent beget a protracted technique to scoot and that makes me embarrassed and impatient", Son said.

By contrast "there is technological innovation in the U.S., China is growing mammoth and Southeast Asia is booming", Son said. "There is correct no excuse for entrepreneurs in Japan, myself integrated".

"It only just began and I feel there is tremendous potential there", Son told Nikkei Business.

WeWork and Uber may be losing money now, but they will be substantially profitable in 10 years' time, Son said in the interview. The strategy is to invest in companies that share his vision of a world being reshaped by artificial intelligence, he said. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance.

One of those founders may very well be WeWork's former CEO Adam Neumann, whom SoftBank reportedly pressured to resign amid public scrutiny over the IPO filing.

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