SoftBank Posts $7 Billion Loss on US Data Centre Hit

SoftBank Group swung to a net loss of 1.1 trillion yen (about US$7 billion) in the July-September quarter, hit by a US$3.7 billion charge linked to AI data centre projects in the United States, Reuters reported on Tuesday.

The Japanese technology investor had booked a profit of 2.5 trillion yen in the same period a year earlier, when a large investment gain on its stake in ChatGPT-maker OpenAI lifted results, according to Reuters.

Three analysts polled by LSEG had forecast results ranging from a profit of 233 billion yen to a loss of 113 billion yen, Reuters said. Seoul Economic Daily, citing Bloomberg, reported that analysts had expected a net profit of 129 billion yen, and described the result as the group’s first net loss in two years.

Data centre charge

Reuters said the US$3.7 billion loss arose after a SoftBank subsidiary invested in equipment for AI data centre projects in the US, plans that were later revised. The company had made large advance payments for the US build-out, the news agency added.

Seoul Economic Daily reported that the costs stemmed from a change in plans for the supply of power equipment for a data centre project in Ohio. Related losses, including non-refundable advance payments, totalled 597.2 billion yen in the first half of the financial year, the paper said.

Revenue for the quarter rose 15.6% to 2.2154 trillion yen from 1.9165 trillion yen a year earlier, according to Seoul Economic Daily.

Vision Fund and financing costs

The Vision Fund segment posted a loss of 81.6 billion yen, where analysts had expected a profit, Seoul Economic Daily reported. Citing Bloomberg, it said falls in the shares of Arm Holdings, Intel and Coupang added to the pressure, as SoftBank reflects changes in the fair value of its holdings in its results.

Financing costs more than doubled to 462 billion yen in the quarter, Reuters said. Seoul Economic Daily put the figure at 461.9 billion yen, about 2.6 times the 174.7 billion yen a year earlier, and attributed the rise to heavier borrowing, a larger balance of corporate bonds and higher funding rates.

The yield on SoftBank’s five-year corporate bonds climbed to 8.22% from 7.72% at the end of September, the paper said, citing Quick and FactSet.

SoftBank has spent US$64.6 billion on a stake of about 13% in OpenAI, according to Reuters. Seoul Economic Daily said the group invested US$10 billion in OpenAI last month, completing its full US$30 billion commitment.

What’s next

OpenAI’s initial public offering has been pushed back to next year, Reuters reported. A listing would allow SoftBank to monetise its stake, the agency said.

SoftBank’s shares, like those of other AI-linked companies, have almost halved in value since the start of June, according to Reuters. Seoul Economic Daily said analysts point to sharply higher corporate bond yields as a risk going forward.

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