SoftBank sees profit surge amid scrutiny over Saudi ties
SoftBank Group Corp. founder Masayoshi Son is starting to see the benefits of his enormous technology investments -along with the scrutiny that comes from taking money from Saudi Arabia.
SoftBank reported secondquarter profit of 706 billion yen ($6.2 billion), far exceeding analyst estimates, thanks to multibillion dollar gains from his many deals. Yet Son also faced repeated questions during a postearnings briefing in Tokyo about his relationship with Saudi Arabia, the biggest investor in his $100 billion Vision Fund.
Son has been remaking SoftBank from primarily a telecommunications operator into a technology investment firm. His investments contributed 393 billion yen to profit in the quarter, more than all the other businesses combined.
The company cited increased valuations of India’s online hotel startup OYO Rooms and graphics card maker Nvidia Corp. among its gains. “The Vision Fund is showing profits worthy of SoftBank 2.0,” Son said at a briefing in Tokyo. “Next year, I believe we will not only exceed these results, but may even deliver an operating profit on the level that Japan has never experienced before.”
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SoftBank has faced criticism over its relationship with Saudi Arabia in the wake of the murder of government critic Jamal Khashoggi by Saudi agents. The kingdom contributed $45 billion to the Vision Fund as Son forged personal ties to Saudi Crown Prince Mohammed bin Salman, whose associates have allegedly been implicated in the killing.
Son began his Tokyo press conference by addressing the murder, his first public comments on the incident. He said he pressed the Saudis to get to the bottom of the Khashoggi killing and hold the guilty accountable. However, he said SoftBank will continue to use Saudi money for investments because he has an obligation to help the country diversify its economy.
“It is a terrible tragedy that should not have occurred,” he said. “On the other hand, we have accepted an investment from the citizens of Saudi Arabia. It is an important investment for the economic diversification of Saudi Arabia, to get their economy away from depending solely on crude oil. We cannot turn our backs on the Saudi people.”
Son’s proactive comments didn’t end the scrutiny. He faced several questions about the Saudi relationship and what the possible implications of the investigation are. As for the financial results, they showed that predicting Vision Fund contributions on a quarterly basis remains a challenge for investors and analysts. The fund benefited as its stake in Oyo doubled in value to about $200 million, while shares of Nvidia rose 19% last quarter. SoftBank also saw a surprise profit at Sprint Corp., the US wireless operator that it is planning to sell.