SoftBank Posts $7 Billion Quarterly Loss on Power Write-Off and Intel Hedges

SoftBank Group posted a net loss of ¥1,115.3 billion ($7.0 billion) for the quarter to Sept. 30, reversing a ¥2,502.2 billion profit a year earlier, results released in Tokyo on Tuesday show. The damage came from two places: a write-off on power equipment for U.S. AI data centers, and losses tied to Intel shares. OpenAI, the engine of last year's profit, contributed nothing this time.

Revenue tells a different story. Net sales rose 15.6% to ¥2,215.4 billion, above the ¥2.02 trillion LSEG estimate cited by CNBC. For the first half, SoftBank lost ¥768.0 billion ($4.8 billion), against a ¥2,924.1 billion profit a year earlier. Dollar figures use the presentation's quarterly average rate of ¥160.12 per dollar.

Where did the money go?

The largest single item was ¥597.2 billion ($3.73 billion) at Silver Bands 7, a vehicle funded by SoftBank and Vision Fund 2, separate from SB Energy. SB7 had reserved manufacturing capacity and bought generators to secure supply for U.S. AI data centers, including the PORTS-Pike Technology Campus in Pike County, Ohio. It paid ¥1,500.9 billion ($9.48 billion) for that procurement by Sept. 30.

SB7 "revised its equipment procurement strategy given the evolving requirements of its existing and planned projects," the company said. The loss splits into ¥457.0 billion of non-refundable advance payments and ¥140.2 billion of contract changes and settlements. In exchange, SB7 can claim up to $2.1 billion in rebates on future equipment purchases over ten years, subject to conditions. SoftBank did not book the rebates as an asset because the amount could not be determined. That is a promise with an asterisk attached.

After the write-off, $6.6 billion of advance payments remain on the balance sheet. SoftBank expects to recover them through project financing. PORTS-Pike is planned at 8 GW of IT capacity, and SoftBank signed a 20-year lease for the entire site with OpenAI in August.

What happened with Intel?

SoftBank raised $7.4 billion in August through prepaid forward contracts backed by Intel shares. Intel's share price then rose, and SoftBank booked a ¥321.9 billion derivative loss on those contracts. It also recorded a ¥270.1 billion valuation loss on the Intel shares themselves. Finance costs rose to ¥461.9 billion from ¥174.7 billion a year earlier.

The OpenAI stake was held flat. At Sept. 30 it stood at a $99.6 billion fair value against $54.6 billion invested, a cumulative gain of $45.0 billion. A third $10 billion tranche on Oct. 1 completed the $30 billion follow-on committed in February at a $730 billion pre-money valuation. Total invested now reads $64.6 billion, roughly 13% of OpenAI.

The Vision Funds made a gross investment gain of $534 million. Vision Fund 1 lost $24 million, as a $1.3 billion gain on ByteDance was outweighed by declines at listed holdings including Coupang and Grab. Vision Fund 2 and other funds gained $558 million. CNBC attributed the loss to the tech sell-off. The filings show the write-downs on public holdings were far smaller than the power-equipment loss and the Intel items.

How strained is the balance sheet?

SoftBank raised $56.5 billion during the quarter. It repaid the full $30 billion drawn on a $40 billion bridge loan used for the OpenAI follow-on, and cancelled the undrawn $10 billion. The repayment drew on an $11.87 billion term loan, the $7.35 billion of Intel-backed forwards, and a $5.0 billion increase to a margin loan secured on Arm shares. Vision Fund 2 borrowed $10 billion in August against OpenAI shares. SoftBank issued bonds worth ¥4,065.3 billion equivalent during the half.

Net asset value fell to ¥59.8 trillion ($380 billion) from ¥72.3 trillion ($445 billion) at June 30. The loan-to-value ratio rose to 15.9% from 13.0%, still inside the 25% ceiling SoftBank sets for normal conditions. Cash stands at ¥5.0 trillion ($32 billion), against ¥1.6 trillion of bond redemptions due over two years. The cost of insuring SoftBank's debt against default hit a four-year high last week, as MLQ.ai reported.

Elsewhere, the picture stays busy. SoftBank shares closed 13.9% higher on Tuesday before the results, tracking Wall Street's rebound. On Monday, SoftBank, Grab and Sarawak's PETROS committed $1.85 billion of initial capital to AI infrastructure in Malaysia, with SoftBank's share at $1 billion and a target of at least 5 GW of AI computing capacity. SoftBank also arranged $1.75 billion of LBO financing in August for its $5.4 billion purchase of ABB's robotics business; China has since blocked that purchase in China, and the two companies are exploring a carve-out. The write-off and the Intel hedges will keep scrutiny on whether the AI infrastructure buildout can absorb capital at this pace without further charges.