Stung by WeWork, SoftBank Boss Charts Cautious IPO Course

Stung by WeWork, SoftBank Boss Charts Cautious IPO Course

Stung by WeWork, SoftBank Boss Charts Cautious IPO Course

Japanese large SoftBank Team has observed its earnings dragged into the worst quarter at any time for the enterprise, off the again of a cut in the valuations of its investments in Uber and WeWork, and its economic offer for WeWork next its scrapped IPO past month.

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

Mr Son said SoftBank would aim to get a return on its WeWork investment in four to five years with a turnround plan that involves a freeze on new leases and shutdown of its lossmaking noncore businesses.

"Operating loss from SoftBank Vision Fund and Delta Fund was ¥572.6 billion; reflecting unrealized valuation loss (net) of ¥537.9 billion from investments held at the second quarter-end due to a decrease in the fair values of investments including Uber and WeWork and its three affiliates", SoftBank said in its results.

"WeWork is in conversation with employees in EMEA as we make changes to our operating model and workforce in the light of our refocused strategy", a spokesman from WeWork said, without directly addressing potential job cuts.

Up to now, SoftBank's investments in WeWork hang reportedly amounted to $18.5 billion sooner than its managerial takeover in October. The company found itself in the red even though its Japan-based telecommunications business, SoftBank Corp., beat analyst estimates by reporting a 9% increase in profit.

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.

Son said WeWork's product - good-looking office space that companies and entrepreneurs can rent short term - was sound, noting SoftBank's satisfaction with some of its WeWork offices in Japan.

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The telecom unit was a rare bright spot in SoftBank's earnings this week, reporting a 9% increase in second-quarter operating profit.

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.

Son's certitude may spook investors given the WeWork fiasco. "It will likely be a lengthy process to fix WeWork", said Bloomberg Intelligence analyst Anthea Lai. "If SoftBank is to go on as an investment company, it needs to do a better job explaining its own governance to investors".

Still, Son admitted that he overestimated the company's value and later discovered it had all kinds of corporate governance problems, including co-founder Adam Neumann's outsized power and control rights.

"New executive leadership is evaluating our operations and assets across all geographies, including Hong Kong", a spokesman for WeWork said in an e-mail.

"There are many of those that are giving us a profit", he said.

Still, Son said he plans to keep making his investments. "There's no need for me to be so overcome with regret that I wither away", he acknowledged all the contrivance in which thru the match.

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