SoftBank profit beats analysts’ projections
This comes amid its shift into deals and investments
TOKYO: SoftBank Group Corp’s earnings are starting to reflect its transition into a company that invests and makes deals.
Operating profit was 479.3 billion yen (US$4.3bil), topping analysts’ projections, in the fiscal quarter ended June, as US unit Sprint Corp returned to profit for the first time in three years. Sales came in at 2.19 trillion yen, matching predictions, the Tokyobased company said in a statement.
SoftBank’s founder Masayoshi Son has long relied on earnings from Japanese wireless and telecom operations, using the money to make acquisitions and investments.
The billionaire is in the process creating the US$100bil SoftBank Vision Fund, which was included in the results for the first time, to speed up investments in technology startups abroad. And the deal-making is set to continue, with Sprint said to be back in merger talks with T-Mobile US Inc.
“The issue is whether SoftBank is a conglomerate, or else an investment vehicle,” Pelham Smithers, whose London-based firm offers equity research on Asian technology companies, wrote in a note to clients. “This is likely to be the question which focuses the minds of both senior management and investors over the next few years.”
Underscoring the notion that SoftBank is becoming more of an investor, the Tokyobased company reported losses on derivatives of 257 billion yen, which pushed net income to 5.5 billion yen, well below estimates. The loss was related to a financial arrangement a year ago to sell shares in Alibaba Group Holding Ltd through a trust in order to raise funds. Since then, Alibaba’s stock has climbed more than 80%, forcing SoftBank to recognize the difference.
SoftBank’s shares have climbed 16% this year and closed at 9,023 yen yesterday.
The Japanese wireless operator has a market value of about 9.9 trillion yen, while its public shareholdings are worth 17.1 trillion yen.
Son has for years maintained that his company is undervalued, urging investors to see SoftBank as a “goose with more golden eggs in its belly.”
Even as Sprint struggles to return to profit and stem subscriber losses, Son has set his sights on a possible merger with Charter Communications Inc, the second-largest cable provider in the US. Son has secured about US$65bil in financing for a possible offer for Charter, according to people familiar with the plan.
At the same time, Sprint is said to have resumed preliminary merger discussions with T-Mobile US Inc people with knowledge of the matter said.