TOKYO: SoftBank Group on Tuesday (Aug 11) reported a 12 per cent rise in net income in the first quarter but broke with tradition by not report operating profit, saying it was “not useful” as a measure of the conglomerate’s investment performance.
Net profit was 1.3 trillion yen (US$12.3 billion) in the April to June quarter after the group booked a gain following the merger of US wireless carrier Sprint with T-Mobile US. The result compared with 1.2 trillion yen in the same period a year earlier.
SoftBank’s US$100 billion Vision Fund posted an investment gain of 297 billion yen in the quarter as the fund sold down assets and revalued its portfolio upwards.
The results would be a relief for chief Masayoshi Son, who has faced an increasing drumbeat of criticism for his investment strategy after recent record losses for the firm.
Son transformed what began as a telecoms company into an investment and tech behemoth with stakes in some of Silicon Valley’s hottest start-ups through its Vision Fund.
He has battled opposition to his strategy of pouring money into start-ups, including troubled office-sharing firm WeWork, that some analysts say are overvalued and lack clear profit models.Advertisement
The results put SoftBank back in the black after a troubled financial year that saw Son’s investment woes magnified by the coronavirus pandemic and plunges in global stock markets.
Son has insisted that his strategy is sound, and that SoftBank’s portfolio is broad enough to weather the storm, but acknowledged the challenges when the firm reported an eye-watering US$8.9 billion annual net loss in May, hit by the WeWork debacle and stock crashes.
The results come after SoftBank launched an aggressive plan to sell up to US$41 billion in assets to finance a stock buy-back, after Son declared SoftBank shares undervalued.
But the fundraising was also intended to reduce the firm’s debts and increase cash reserves.
Paired with the recent recovery in tech stock prices, the strategy appeared to be paying off, analysts said.
“SoftBank has achieved a V-shape recovery,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities.
“Investors welcomed its swift decision to sell assets and buy back its own shares, which has resulted in a jump in its share price,” Kawasaki told AFP before the earnings announcement.
The firm reported 983 billion yen in investment gains for the quarter to June, including profit from its Vision Fund.
But it warned that the pandemic continued to cause uncertainty, bolstering its investments in e-commerce and food delivery firms, but hammering those in the hotel and hospitality sector.