TOKYO (Reuters) – SoftBank Group Corp., and its founder, Masayoshi Son, to face a day of reckoning on Wednesday when the investment juggernaut is likely to post weak second quarter results, hit by steep falls in the rating of some of its biggest tech bets.
FILE PHOTO: a japanese SoftBank Group, Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, on November 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo
SoftBank has renewed investor scrutiny after it was forced to bail out of one of the most well-known companies in its portfolio, the cash to burn, to office-sharing firm WeWork, for $10 million.
That has deepened concerns about the Son’s strategy of pouring billions of dollars into unproven, money-losing start-ups at a time, it is pressed on by a sell-off across the majority of its publicly traded stakes.
Uber Technologies Inc posted on Monday a wide-quarter loss, sending the shares sliding in after-hours trading. SoftBank’s $100 billion Vision to Fund a $7.7 billion investment in the US in the ride from the enterprise.
SoftBank’s quarterly results come at a crucial time for his Son, when he was trying to raise capital for a follow-up of Saudi-funded Vision Fund.
SoftBank is expected to post an operating loss of 48 billion yen ($442 million) for its July-September quarter on Wednesday, according to the median forecast of four analyst estimates compiled by Refinitiv.
That would be the first quarterly loss in 14 years, Refinitiv data, it appears that, compared to an operating profit of 706 billion yen a year earlier.
SoftBank has delivered several quarters of the industry-beating profits, driven by the internal revaluation of the tech, using the perspective of the Fund, which had its first close in May 2017.
Analysts ‘ estimates vary widely, in part because they turned it gives a little detail about how it is good for the profits or losses in the books.
A continued lack of disclosure about the valuation on a Wednesday, it would “risk losing the confidence of investors,” said Amir Anvarzadeh, a market strategist in the case of Asymmetric Agents.
In view of the declining share price, down about 30 percent since July, the consortium may disclose to a share of the 500 billion yen in order to try and stem the slide, Anvarzadeh he said. SoftBank announced a 600-billion-yen purchase in the month of February.
THE UNUSUAL STEP OF
Investors will be looking closely at how they turned the accounts to the value of his / her participation at WeWork, which has poured $13 billion for a majority stake. WeWork has been appreciated by, they turned up as high as $47 billion, the most recent in January, and is currently valued at $8 billion.
The Japanese company is expected to announce on Wednesday a rate of at least $5 billion due to a decrease in the values of WeWork and some of the other top holdings, Bloomberg reported at the end of the previous month.
SoftBank, has taken the unusual step of using the set-up of the bailout is to avoid having to re-consolidate, WeWork is on the books, despite taking an 80% interest, in reduction of the obligations to provide information as to attempt to avoid the responsibility for the start-up of the provision for onerous lease commitments.
Dan Baker, analyst with Morningstar, said he, it is to highlight the value of WeWork zero to SoftBank in the restructuring, it has been shown that there is no clear path to profitability.
SoftBank said last week, following a $2.6 billion gain in the value of his / her participation in the Son, to be the most demanding, tech deployment, Alibaba Group Holding.
The aim of the Fund is faced with a headwind, sellside analysts, are highlighting the value of the other parts of the SoftBank portfolio, including telecom SoftBank Corp., which on Tuesday reported a 9% rise in second-quarter earnings and Sprint’s.
FILE PHOTO: The logo of SoftBank Group, Corp, is displayed at the SoftBank World in 2017 conference to be held in Tokyo, Japan, on July 20, 2017. (REUTERS photo/Issei Kato/File Photo
Sprint has been struggling to close a $26 billion merger with T-Mobile due to regulatory barriers, in a deal that, if successful, you will be removed from the telcos, and the debt of SoftBank’s highly leveraged balance sheet.
SoftBank is the owner of chip designer Arm, to which the Son paid a huge premium for a $32-billion deal in 2016, the banking sector of the company, which is dominant in the mobile sector, could be replicated successfully in emerging industries, where a lack of critical mass.
The Arm, which is under SoftBank ownership, has become a money-losing plans to return to the public market in 2023.
Report by Sam Nussey; Editing by David Dolan and Muralikumar Anantharaman