SoftBank back in black following historic loss

By Robert Scammell

SoftBank Group Corp. reported a net profit of 1.26tn Yen ($11.8bn) in its Q1 results, marking a swift rebound from its record $12.7bn annual loss for the year ended March.

The Japanese conglomerate returned to the black thanks to asset sales and soaring valuations of technology startups that it holds stakes in.

SoftBank’s Saudi-backed Vision Fund, which has invested billions in tech startups such as Uber, WeWork and DoorDash, reported an investment gain of 297bn yen ($2.8bn) in the quarter ended June.

Rising valuations in the likes of ride-hailing firm Uber and business collaboration platform Slack helped bolster SoftBank’s lightning-fast turnaround.

Since its record annual loss, the first in 15 years, SoftBank has been selling off assets to make up for the shortfall. It has also bought back shares at record rates, which in turn boosted SoftBank’s stock price.

It is reducing stakes in cell phone carrier T-Mobile and Chinese ecommerce giant Alibaba, among others.

Since 3 August SoftBank has sold or monetised 4.3tn yen ($40bn) worth of assets.

SoftBank Q1 results: “For us, cash is the defence”

SoftBank took the unusual step of not reporting operating profit for the April-June period, describing it as “not useful”.

SoftBank’s remarkable Q1 turnaround will ease pressure on founder and CEO Masayoshi Son, who has faced criticism for bad bets in the likes of office-space firm WeWork.

In an investor video call on Tuesday, Son said cash was key during the pandemic.

“Every day is like a war,” he said. “For us, cash is the defence.”

SoftBank is reportedly considering a sale or IPO of British chip designer Arm to chipmaker Nvidia, which could further boost SoftBank’s cash reserves.

After SoftBank’s Q1 results went live its share price dipped 3%. However, its share price has rallied by 136% since its value nosedived in March on the news of its record loss. Its share price is up by nearly 40% for the year to date.

Read more: SoftBank managing partner: ‘We learned our lesson with WeWork’