Japanese telecommunication giant Softbank has written down all or a major part of its $200 mn investment in mobile ad network InMobi (made in 2011).
In its 2013 annual report (June 2013), Softbank said
Equity in losses of affiliated companies was ¥33,524 million ($325.45 mn), an increase of ¥30,576 million year on year. This was mainly due to a write-down of goodwill that arose related to InMobi Pte. Ltd. and PPLive Corporation.
As of March 2013, Softbank accounted for $0 mn of capital in InMobi (see figure below)*.
We aren’t sure why Softbank has written down its investment (this could be related to taxation, as some sources point out). In response to our questions, an InMobi spokesperson said, “We cannot comment on the actions of Softbank.”
When a company makes a purchase, it is written in its books as a combination of goodwill and assets. The amount of money it pays above the value of the target company’s assets is written in the books as goodwill and other intangible assets. Internet companies tend to be asset light.
In this case, Softbank acquired 35% of Inmobi for $200 mn. Along with a goodwill writedown in PPLive Corporation (in which Softbank invested $250 mn) the company has taken a charge of $325.45 mn.
Rebranded from mKhoj, InMobi earlier raised $8mn from KPCB and Sherpalo Ventures (in 2010). The company was founded in 2007 and at the time it had raised $50,000 from Mumbai Angels.
In March 2011, the company reported a loss of $10 mn on a topline of $27.8 mn. In 2012, the company lost $43 mn on a topline of $60.2 mn. At the end of March 2013, Inmobi reported sales of $104.3 mn and a loss of $84.5 mn. (via: Note that this could be the revenue and loss numbers from the Singapore registered subsidiary of Inmobi which ET has accessed.)
Inmobi Revenue & Loss Since Softbank Investment
$ 164.5 mn
$ 127.5 mn
If you add up the losses since $200 mn investment by Softbank in September 2011, you get to $127.5 mn in losses over the last two years.
InMobi has been one of India’s successful product stories. The mobile advertising network claims to have reached 759 million active users per month, providing advertisers with the largest global reach after Facebook. It had also acquired San Francisco based MMTG Labs and UK based Overlay Media.
Inmobi cofounder, Naveen Tewari had given an inspiring UnPluggd talk at UnPluggd, NextBigWhat’s flagship startup conference.
* Softbank Annual Report (pdf).