SoftBank Group today released the fourth quarter and full-year financial results for the fiscal year 2022 ending March 31, 2023. SoftBank’s technology investment arm, the Vision Fund, reported a record loss as the recent rally in technology stocks did not provide much impetus.
For fiscal 2022, the Vision Fund lost 4.3 trillion yen ($32 billion, 221.02 billion yuan), compared with a loss of 2.55 trillion yen a year earlier. “The Vision Fund’s investment loss was 5.28 trillion yen, compared with a loss of 3.43 trillion yen a year earlier.
Despite the rebound in technology stocks this year, the overall performance is still lower than a year ago. In SoftBank’s 2022 fiscal year, the Nasdaq 100 index fell about 11%. Overall, SoftBank Group reported a net loss of 970.14 billion yen for fiscal 2022, narrowing from a loss of 1.7 trillion yen a year earlier.
SoftBank said that in the past year, the Vision Fund has made gains in exiting investments in well-known companies such as Uber. For example, it narrowed its overall losses by selling stakes in T-Mobile and Alibaba. SoftBank also sold off its entire stake in Uber last August. But it also lost money on investments in other companies, including GoTo, Indonesia’s largest technology company.
SoftBank’s chief financial officer Yoshimitsu Goto said today that its current investments are well-capitalized, with several companies poised to go public at a total valuation of $37 billion, without mentioning the companies by name.
In defense mode
SoftBank’s Vision Fund, which is the brainchild of company founder Masayoshi Son, consists of Vision Fund I and Vision Fund II It invests mainly in high-growth stocks. But in recent years, these stocks have faced resistance from rising global interest rates, causing investors to dump riskier stocks such as technology stocks.
While losses have been mounting, Masayoshi Son’s key ally and SoftBank executive Rajeev Misra resigned from some of his positions at the company last August. Misra, who played a major role in the early success of the Vision Fund, left just as SoftBank posted its biggest quarterly loss ever for the second straight quarter.
About a year ago, Masayoshi Son said SoftBank would go into “defensive” mode in the face of headwinds and become more disciplined in its investments. That strategy seems to have worked in the first three months of the year, thanks to a rebound in technology stocks. “The Vision Fund’s investment loss for the period was 236.8 billion yen, well below the previous quarter’s 730.3 billion yen.
SoftBank said it made $3.14 billion in new or follow-on investments in fiscal 2022, well below the $44.26 billion it made in the same period the previous year. At a press conference today, SoftBank CFO Yoshimitsu Goto also said it had been a “volatile” year, citing the collapse of Silicon Valley Bank and the acquisition of Credit Suisse by UBS.
In the first quarter, we may see some signs of improvement,” he said. But for these problems (financial system instability), no fundamental solutions are expected.”
Nevertheless, Yoshimitsu Goto also pointed out that SoftBank is making “significant progress” in artificial intelligence (AI) technology, for which the company is considering whether to continue to maintain a defensive mode. In this case, he said, “should we remain on the defensive or should we maintain a balance on the offensive?”
Spotlight on ARM IPO
Investors are currently looking forward to the upcoming ARM IPO (Initial Public Offering). Later this year, ARM will list on NASDAQ. Last month, ARM has secretly filed its application.
The ARM IPO will not only bolster SoftBank’s balance sheet, but may also provide it with more capital for new investments. In response, Yoshimitsu Goto said today that he could not discuss ARM’s situation in detail because the application had been filed in secret. But he said preparations for the IPO are “going well.
For fiscal 2022, ARM’s sales were 381.7 billion yen (currently about 19.619 billion yuan), up more than 27 percent year-on-year. Pre-tax profit was 48.6 billion yen (currently about 2.498 billion yuan), up 18 percent year-on-year.
To attract investors, it was announced in March that ARM plans to adjust its business model to increase the price of its chip designs in the hope of boosting revenue before the IPO. Last month it was also reported that ARM was building its own chips to demonstrate its capabilities in product manufacturing.
