SoftBank reports $7bn quarterly loss after US data centre writedown

In short: SoftBank reported an unexpected $7bn quarterly loss, mainly due to a large writedown linked to its US data centre projects.

What happened

SoftBank said it lost ¥1.1tn, about $7bn, in the quarter ending in September. Analysts had expected a profit of ¥84bn, according to LSEG data. It was the company’s first quarterly loss in nearly two years.

The biggest hit was a ¥597.2bn, about $3.7bn, charge tied to procurement for US data centre projects. A “writedown” is when a company admits something it paid for is worth less than it thought, like buying materials for a home renovation and then changing the design so some items are no longer usable.

SoftBank said requirements for its existing and planned projects changed, including a large development in Ohio. As a result, it said $2.9bn out of $9.5bn it paid upfront went to equipment it no longer needed. The company also pointed to high financing costs, and it reported a ¥270.1bn loss linked to the value of its Intel holdings and related financial contracts.

SoftBank’s Vision Funds, which invest in tech companies, still recorded an investment gain of ¥85bn. SoftBank also said it has rights to rebates of up to $2.1bn on future equipment purchases, depending on conditions.

Why it matters

Data centres are large buildings full of computers that power online services, including AI tools. SoftBank has made big bets on AI, including a commitment of about $65bn to OpenAI, the company behind ChatGPT. A loss this large raises questions about how smoothly these costly data centre plans are going, and how much financial pressure SoftBank may face as it keeps investing.

Source: Financial Times