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Japan’s SoftBank In Profit Bounceback Despite Vision Fund Hit

The big tech investor booked a profit of $2.11 billion in January-March, compared to a loss of $200 million a year earlier

The logo of SoftBank Group Corp is seen at the company's headquarters in Tokyo, June 30, 2016. REUTERS/Toru Hanai
The logo of SoftBank Group Corp is seen at the company's headquarters in Tokyo. Photo: Reuters


Japan’s SoftBank Group bounced back to a net profit in the final quarter of its financial year, despite its money-losing Vision Fund arm highlighting the challenges the bellwether technology investor faces, including realising its big AI ambitions.

SoftBank saw a profit of 328.9 billion yen ($2.11 billion) in January-March, compared to a loss of 32 billion yen a year earlier, it said on Monday. Still, the second straight quarter of profit was not enough to keep it in the black for the full year.

Investors are increasingly focused on the outlook for SoftBank subsidiary Arm Holdings, the British chip designer, which SoftBank’s management hope will fuel the push into artificial intelligence across its portfolio of companies.

“Arm is at the core of SoftBank Group’s AI shift which will create a new ecosystem, along with the various assets we’ve held for a long time that are using AI, centred on the Vision Fund,” Chief Financial Officer (CFO) Yoshimitsu Goto told a press briefing in Tokyo.

Arm has ridden a wave of investor enthusiasm for the perceived beneficiaries of widespread adoption of AI, helping its share price more than double in February.


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Still, Arm’s surging valuation has not contributed to SoftBank profit as it is a subsidiary.

Whereas Arm reported record January-March sales on licence and royalty revenue, SoftBank booked a 33-billion-yen loss from its Arm investment in the last fiscal year due to increased expenses related to stock compensation and hiring.

Arm’s headcount grew by more than 1,100 in the year ended March, with more than 80% of net new hires being in engineering.

Most of SoftBank’s investments through its Vision Fund unit suffered valuation loss in the fourth quarter, leaving it with a 57.5 billion yen loss.

A bright spot came in the form of South Korean e-commerce firm Coupang which generated around $600 million in unrealised investment gain.

In February, Goto said SoftBank – known for volatile earnings – was returning to a “growth trajectory”.

Overall, SoftBank’s fourth-quarter net profit compared with a 32 billion yen loss in the same period a year earlier, when capital raised using its Alibaba Group stake cushioned writedowns in the value of Vision Fund private portfolio firms.


  • Reuters with additional editing by Sean O’Meara


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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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