SoftBank CEO Son says his judgment on WeWork was poor in many ways

Reuters

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06 November 2019 11:25

(Reuters) - SoftBank Group Corp fell into the red in the second quarter for the first time in 14 years, with its gigantic Vision Fund suffering a 970 billion yen ($8.9 billion) loss on plunging valuations of WeWork and Uber Inc.

Last month, SoftBank was forced to spend more than $10 billion to bail out WeWork after the U.S. company’s IPO attempt flopped, and it said on Wednesday the fair value of its investment in the office-sharing startup decreased by $3.4 billion in the second quarter.

At a post-earnings briefing, Chief Executive Masayoshi Son said his judgment in dealing with WeWork had been poor in many ways, a remarkable admission for an executive well known for his ebullience.

Here are some of Son’s comments, translated from Japanese:

On WeWork:

* Says his judgment on WeWork was poor in many ways, but the U.S. company is not a sinking boat

* Says in about 18 months the majority of WeWork offices will be profitable as occupancy increases

* SoftBank stopped new leases for WeWork a month ago and this may continue for three to four years, Son says

* Says he expects there will be a hockey stick recovery in WeWork profits

* Son says he was told off by SoftBank board members over WeWork

On WeWork founder Adam Neumann:

* Son says he overestimated Neumann’s good side, turned a blind eye to things like corporate governance, and that he should have known better

* Says learned a harsh lesson from his experience with Neumann

On Vision Fund 2:

* Says Vision Fund 2 is starting investing with SoftBank’s money

* Vision Fund 2 is going to be launched as scheduled, declined to discuss status of negotiations with potential investors

* Vision Fund 2 to be a similar size to the first $100 billion fund

On IPO pipeline:

* Says has started to think SoftBank should be more cautious about timing of IPOs for companies like Uber and Slack

* Says there is no change to the trend that multiple portfolio companies will go public every year

* Says for companies that are getting closer to turning a profit, SoftBank will support them in going public

ORIGINAL POST

Reuters-World-US added by Barbara Bush

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