SoftBank books $7 billion quarterly loss on US data centre hit, financing costs

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SoftBank Group reported a second-quarter net loss of $7 billion, driven by US data centre costs and rising financing payments, as founder Masayoshi Son pursues aggressive…

SoftBank Group, the Japanese investment giant with big bets on AI, said on Tuesday it had swung to a second-quarter net loss of $7 billion, hit hard by hefty buildout costs for data centres in the US and increases in financing payments.

The pain inflicted this quarter by a subsidiary's advance payments for power generation equipment could, however, be offset by rebates for future purchases. SoftBank's borrowing may be of greater concern, with financing costs more than doubling during July-September.

The group raised $56.5 billion during the period — its highest ever quarterly total — as founder Masayoshi Son continues to pursue aggressive investment in artificial intelligence. That spending has spanned data centres, robotics as well as the $64.6 billion purchase of a 13% stake in ChatGPT maker OpenAI.

SoftBank said it logged a $3.7 billion loss due to advance payments for equipment in US data centre projects - including a large-scale development in Pike County, Ohio - after plans changed, but it added that it would be entitled to rebates of up to $2.1 billion on future purchases.

Intense competition around securing energy supply and power generation equipment for data centres led to buying before long- term specifications were finalized, Chief Financial Officer Yoshimitsu Goto told a press briefing in Tokyo.

These could not be refunded when cancelled and also incurred fees, Chief Accounting Officer Kazuko Kimiwada added.

"There are many cases where you have to change strategy for what you thought would probably have been OK a year or two ago," Goto said.

“In the future, while we’re still in a sense doing things by trial and error, how to assess assets we no longer need may become a subject of discussion,” he added.

The 1.1 trillion yen ($7 billion) second-quarter net loss far exceeded analysts' forecasts and compares with a 2.5 trillion yen profit in the same period a year earlier when it logged a huge investment gain on an increase in the value of its stake in OpenAI.

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