Masayoshi Son built a reputation as the unicorn hunter. Now the Japanese magnate’s biggest tech bets are leading to multibillion dollar losses, including WeWork.

But Son hasn’t given up on WeWork, which has a large presence in the Research Triangle and Charlotte.

SoftBank says it has ample cash to handle WeWork’s woes, and Son added:

“There is no storm, and things are under control.”

SoftBank on Wednesday reported an operating loss for the most recent quarter of $8.9 billion on its mega tech funds including the Vision Fund, which holds investments in Uber, WeWork, Slack and other major startups, CNN Businessreported from Hong Kong.

SoftBank’s $1.5B bailout package arrives just in time for WeWork

Those losses wiped out what would have otherwise been a profitable quarter for SoftBank. The group reported losses of $6.5 billion for the three months that ended in September. That’s far worse than the $442 million that analysts had expected.

Shares of the company are up 18% this year in Tokyo. The tech-heavy Nasdaq, meanwhile, has jumped 27%.

Uber shares fell 37% between July and September, as did Slack’s stock. Cancer medicine company Guardant Health, another Vision Fund investment, dropped 31%.

Then there’s WeWork. SoftBank rescued the struggling startup last month, taking majority control of the company with an injection of nearly $10 billion. That bailout was announced after the most recent financial quarter ended — but the fiasco certainly clouds the outlook. It’s another knock to Son’s reputation, too.

From Sherisse: “The bailout raised concerns about how much faith — and money — Son places in charismatic founders like WeWork’s Adam Neumann. Neumann stepped down from the company’s board and left his role as CEO, after investors balked at WeWork’s lofty valuation and criticized the company’s governance.”

Inside WeWork deal

Last month, SoftBank announced a bailout for WeWork, including $5 billion in new financing, a tender offer of up to $3 billion for existing WeWork shareholders and an acceleration of an earlier promise of $1.5 billion in funding.

Although startups always carry a bit of risk, until recently SoftBank’s diverse portfolio had helped offset any money-losing investments.

Son’s charisma and global perspective have also worked in SoftBank’s favor.

But questionable corporate governance practices at WeWork have landed SoftBank in a crisis, he acknowledged at its earnings news conference.

Various negative media reports about WeWork were “true in some sense,” Son said.

“The perception is that SoftBank is being dragged down into the quagmire of WeWork,” he said. “I am looking back with true regret about the mistaken investment moves that I have made.”

SoftBank’s investment fund called Vision Fund sank into losses, but Son said that overall, its investors are still reaping profits from their total investments and the Vision Fund’s value for shareholders has not fallen despite the latest losses thanks to stock price gains of other holdings.

Apart from WeWork, SoftBank invests in a wide array of companies, including Chinese e-commerce conglomerate Alibaba; car-sharing companies Uber, Didi and Grab; internet company Yahoo and the internet of things, or IoT, Britain-based company Arm.

Son pointed out that while Uber’s share price has fallen recently, it has risen since SoftBank invested in it.

Son promised a turnaround at WeWork, saying it’s “not a sinking ship.” He said he has sent in SoftBank Chief Operating Office Marcelo Claure, who oversaw the merger at Sprint, to lead WeWork and beef up its corporate governance.

Adam Neumann, a co-founder of WeWork, stepped down as chief executive in September.

In a presentation, Son said WeWork was losing money from initial construction and design costs but, with time, its properties will become profitable.

Asked why WeWork was viewed as a technology investment when it’s actually a real estate company, Son pointed to internet technology used by the company, which focuses on offering office space to startups.

It’s common for new companies to start out with losses, including those considered successes such as Amazon and Facebook, he said.

SoftBank says it has ample cash to handle WeWork’s woes.

“There is no storm, and things are under control,” he said.

https://wraltechwire.com/2019/11/01/weworks-ex-ceo-other-execs-face-pregnancy-discrimination-complaint/