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August 6, 2018updated 07 Aug 2018 1:50pm

SoftBank earnings rise 49%, revealing a growing technology superpower

By Lucy Ingham

Japanese technology giant SoftBank Group Corp today reported a 49% surge in first-quarter operating profits, prompting the company’s stock price to climb 2.18%. The SoftBank earnings announcement is a sure sign that the corporation’s aggressive approach to investments is paying off – and Western companies should be taking note.

SoftBank is for many the most important tech company they’ve never heard of. Despite having a relatively low profile in the West, SoftBank has stakes in some of the biggest startups and technology firms in the world.

The company’s primary investment vehicle is its $100bn Vision Fund, which is backed by Saudi Arabia’s Public Investment Fund.

Through this, SoftBank has become Uber’s largest shareholder, swapping a reported $9.3bn for a 15% stake.

Other investments include $4.9bn in leading chip-maker Nvidia, a reported $4.4bn in co-working heavyweight WeWork and $2.3bn for a stake of around 20% in GM Cruise.

The company also acquired semiconductor giant ARM Holdings in 2016.

SoftBank earnings show investments paying off

Such significant SoftBank earnings growth is notable because it shows the company is successfully translating its investment spree into meaningful profit, something that has not always proved achievable with large-scale technology investments.

The profits have largely been attributed to the sale of ARM’s Chinese operations to a local company and the sale of its stake in Flipkart.

The latter represents the first sale of a SoftBank Vision Fund investment, and appears to have proved highly profitable.

The Vision Fund acquired a 20% stake in the Indian e-commerce firm for $2.5bn in 2017, and in May of this year sold the stake to Walmart. While the exact sale price has not been made public, it is thought to have been around $4bn.

SoftBank’s quest to become a technology superpower

The SoftBank earnings announcement demonstrates that the company is rapidly becoming a force to be reckoned with among the technology heavyweights, building on previous successful announcements.

The company’s investments give it key holdings in a wide spectrum of technology sectors.  In e-commerce, for example, its holdings include a significant stake in Chinese giant Alibaba.

Notably, however, many of these areas are still likely to see significant future growth, with Softbank gaining a foothold relatively early in the industry’s progression.

In robotics, for example, SoftBank not only has bought Boston Dynamics, which makes animal and human-like robots, but has its own in-house robotics arm, formerly known as Aldebaran Robotics, which is responsible for some of the most widely available consumer robots, including Nao and Pepper.

As this area grows, SoftBank’s profits and influence will also likely rise, making this hugely positive earnings announcement likely to be one of many for the company.

Verdict deals analysis methodology

This analysis considers only announced and completed artificial intelligence deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.

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