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SoftBank Group Corp., the Tokyo-based technology investor controlled by billionaire Masayoshi Son, swung to a net loss of ¥1.12 trillion ($7.1 billion) in its fiscal second quarter, dragged down by a $3.7 billion charge on power equipment it had ordered for U.S. artificial intelligence data centers.
The loss for the three months to Sept. 30, reported on Nov. 10, compares with a profit of ¥2.5 trillion ($15.8 billion) a year earlier, when SoftBank booked a large gain on its stake in OpenAI. Analysts polled by LSEG had forecast results ranging from a ¥233 billion profit to a ¥113 billion loss.
Revenue rose to ¥2.22 trillion ($14 billion) from ¥1.92 trillion. Finance costs jumped to ¥461.9 billion ($2.9 billion), from ¥174.7 billion a year earlier, as the company carried the debt taken on to fund its AI investments.
The power equipment charge
The biggest single hit was a ¥597.2 billion loss at SB7, a SoftBank subsidiary set up to buy equipment for U.S. AI data center projects. It included $2.9 billion in non-refundable advances on power-generation equipment SoftBank no longer plans to use and $900 million tied to contract changes and settlements.
"SB7 revised its equipment procurement strategy given the evolving requirements of its existing and planned projects," SoftBank said.
Chief Financial Officer Yoshimitsu Goto said fierce competition for energy and equipment had pushed the company to place orders before the long-term specifications of its projects were settled. Chief Accounting Officer Kazuko Kimiwada said the orders could not be refunded once they were canceled.
SoftBank did not name the suppliers or the equipment involved. SB7 had made $9.48 billion in advances and capacity reservations through Sept. 30, of which $6.6 billion remains assigned to projects, including the PORTS-Pike data center site in Ohio. The company may recover up to $2.1 billion in conditional rebates over 10 years but has not booked them as an asset.
The charge follows a public jab from Elon Musk. On Nov. 6, the Tesla Inc. chief executive wrote on X that "SoftBank is defaulting on their turbine orders," without giving details. SoftBank's shares fell 10.8% in Tokyo that day. The company did not comment on Musk's claim at the time.
The OpenAI stake
The results show how closely SoftBank's fortunes are now tied to OpenAI. The company has spent $64.6 billion for a 13% stake in the ChatGPT maker, whose plans for an initial public offering have slipped to next year. SoftBank was once a major shareholder in Nvidia Corp. but sold out of the chipmaker to help fund its AI commitments.
SoftBank's shares have nearly halved since the start of June, falling along with other AI stocks.
Son, 69, founded SoftBank in 1981 as a software distributor and turned it into one of the world's biggest technology investors through early bets on Alibaba Group Holding Ltd. and the Vision Fund. He has made AI infrastructure the company's main focus, including the Stargate data center venture with OpenAI and Oracle Corp. in the U.S.
Earlier this week, SoftBank agreed to put $1 billion into two AI infrastructure projects in Malaysia with Grab Holdings Ltd. and Sarawak's state oil company.
Figures were converted at ¥157.97 to the dollar.
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