SoftBank returns to profitability

08.08.2023

Japan’s SoftBank Group is likely to return to profit when it announces first-quarter earnings on Tuesday, as the portfolio of technology stocks in its investment arm Vision Fund experiences a rebound.

The company has posted two consecutive years of losses due to the falling value of its Vision Fund portfolio and sold its crown stake in Chinese e-commerce company Alibaba Group Holding to shore up its balance sheet.

The return to profitability may ease pressure on the company’s founder and CEO, who has rocked the tech investment world with aggressive bets on late-stage startups but has suffered a series of high-profile failures when the investments underperformed.

Investors will also be awaiting news of a potential blockchain listing of portfolio chip developer Arm, which if successful would provide further cash injections into the group.

SoftBank will post a net profit of 75 billion yen ($525 million) for the April-June quarter.

Its Vision Fund unit has suffered five consecutive quarters of investment losses after backing high-growth companies that have fallen out of favor in the market, forcing the conglomerate to take a defensive stance to conserve cash.

SoftBank’s recent moves include a joint venture to create automated warehouses and an investment in insurance technology company Tractable.

Investments in artificial intelligence will drive growth in the industry have already pushed the market capitalization of chipmaker Nvidia – a former Arm buyer – to more than $1 trillion.

Given the high valuations of industry peers, it sees potential upside for Arm of $31.4 billion over its current book value.