TOKYO: SoftBank Group Corp’s Masayoshi Son said he plans widespread cost cutting at his Japanese conglomerate and its Vision Fund investment arm after a record US$23.4bil loss on plunging portfolio valuations and foreign currency losses. Shares dropped.

The Tokyo-based company lost the vast majority of that money - US$17.3bil in the Vision Fund, as it marked down the value of holdings such as Coupang Inc, SenseTime Group Ltd and DoorDash Inc.

SoftBank also reported a US$6.1bil foreign-exchange loss because of the weaker yen.

The 64-year-old struck a darkly sombre tone after the results Monday, taking responsibility for buying into startups at the height of the market and pledging to slash expenses to get back on track.

Son said he will review “everything” for potential cuts without any “sacred cows.”

SoftBank will scrutinise senior and junior employees in both front and back offices to an extent never experienced before.

“The loss is the biggest in our corporate history and we take it very seriously,” Son said during a press conference in Tokyo.

“We have to resort to big cost-cutting efforts at Vision Fund. The cost-cutting efforts will have to include a reduction in headcount -something I’ve made up my mind to do.”

SoftBank shares fell as much as 3.2% in Tokyo trading.

Son detailed extensive problems and missteps in his portfolio, unusual for a self-made billionaire who tends to emphasise the positive.

He said SoftBank had marked down 284 companies in its portfolio in the latest quarter, while only 35 went up in value. The markdowns included publicly traded portfolio companies, but also hundreds of private companies whose estimated values had dropped because of weak performance or lower comparisons.

A quarter earlier, SoftBank still had profits of about three trillion yen in its investment arm, which includes the first and second Vision Funds as well as Latin American funds. As of June, essentially all of those profits had disappeared.

“We really believed we could do it and we had our heads in the clouds,” Son said. “Of course, the market was bad, there was a war, and there was the coronavirus. We can point to a lot of reasons, but these are all excuses.

“We have to self-reflect about the fact that if we’d been more selective and had invested more properly, it wouldn’t have come to this.”

Asked about what lessons he has learned from the experience, Son said, “There are too many to count.”

With the first Vision Fund, Son said he was trying for home runs and struck out with companies like WeWork Inc.

In Vision Fund 2, he tried a more modest approach of getting on base, but valuations were too high. Now, he will sharply scale back.

“We’re currently strictly suppressing new investments,” he said.

 - Bloomberg