SoftBank Group profit plunges in Q2 owing to WeWork turmoil

How SoftBank says it’ll fix WeWork and turn it profitable

SoftBank's founder, Masayoshi Son, said he was regretting "mistaken investment moves".

In Singapore, CapitaLand Commercial Trust said in July it will lease out 21 Collyer Quay, a 21-storey building in the financial district now occupied by HSBC Holdings, to WeWork.

Consultations with employees of its parent company We Co in its European, Middle East and Africa (EMEA) operations will begin this week, according to a person familiar with the matter on Wednesday.

In a mix of bravado and practicality that's classic Son, the billionaire opened his speech by describing the earnings announcement as "not good at all". As a result, WeWork had to give up on the plans to hold an IPO in late September. In the news conference, Son said that his plans to raise a second $108 billion Vision Fund are still on track.

WeWork's spectacular flame-out this year has sparked questions about Son's judgment in backing unconventional tech founders such as WeWork's Adam Neumann. "In fact, yes, there is", Son said.

Son was also intent on making clear that SoftBank has a "no bailout" policy and there won't be any other rescues among the companies it invests in.

The company investment into WeWork yielded around $3.4 billion-large writedown (374.7 billion yen), which came only two weeks after the firm took control over 80% of WeWork. WeWork's Japan business is already profitable, a model of what is possible.

Last month, SoftBank confirmed that it was injecting billions of dollars into WeWork, once hailed as a shining unicorn valued at $47 billion at the start of the year.

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Below questioning from journalists on Wednesday, Son justified the categorisation and financial investment in WeWork owing its featuring of business house to AI corporations, as effectively as previously acquiring ideas for AI that it no longer designs to pursue.

The cash-strapped company has warned European staff - most of whom are based in London - that job cuts are looming, just as it ponders exiting some prime Hong Kong real-estate leases. But Son took issue with the characterization of the infusion as a bailout, choosing to describe it as a way to buy in at a cheaper valuation and lower the average cost of its stake in the company.

"Actually they have increased about five times compared to our invested amount", Son said. Instead, Son chose to buy even more shares at a discounted price, effectively lowering the average cost of his equity in the business.

SoftBank says it has ample cash to handle WeWork's woes. With the latest investment it has 41.2% at $19.38 a share.

Japanese giant SoftBank Group has seen its earnings dragged into the worst quarter ever for the company, off the back of a cut in the valuations of its investments in Uber and WeWork, and its financial package for WeWork following its scrapped IPO last month.

Masayoshi Son, the CEO of Softbank, stated recently that SoftBank does not plan to make investments for the objective of rescue, despite the recent quarterly loss - the first one in 14 years.

Analysts caution that Son has over-promised and under-delivered before.

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