SoftBank Group swung to its first profit after four straight quarters of losses, backed by a rebound in the value of Vision Fund¡¯s public holdings and a windfall from T-Mobile U.S. shares.
The Tokyo-based technology investor reported a net income of ?950 billion ($6.4 billion) for the December quarter, reversing a ?783 billion loss for the same period a year ago. It¡¯s the Japanese company¡¯s first profit since September 2022, as it navigates volatile swings in the value of its startup investments.
The Vision Fund unit reported a ?422.74 billion gain for the period, up from a loss of ?660.1 billion a year ago. DoorDash, AutoStore Holdings, and Symbotic were among the best performers contributing to the Vision Fund. The value of Didi Global¡¯s shares also rose 22% in the over-the-counter market.
The solid quarter may herald more relief to come, according to Kirk Boodry, an analyst at Astris Advisory. ¡°We have not been overly bullish on the current portfolio, but the listing of key VF1 assets like ByteDance or Fanatics could provide some relief in 2024,¡± he wrote in a note ahead of the earnings, referring to Vision Fund¡¯s investments in China¡¯s TikTok owner and the American online sportswear and fan gear store.
SoftBank booked an extra windfall from an arrangement to receive more than 48 million T-Mobile shares worth almost $8 billion. The deal was part of an agreement struck when T-Mobile acquired rival and former SoftBank unit Sprint in 2020, designed to give SoftBank more T-Mobile shares if the stock rose above a certain level during a given period.
A 40% rally in newly listed chip design unit Arm Holdings¡¯ shares in the December quarter further bolstered SoftBank¡¯s finances. As the owner of a roughly 90% stake in the U.K. firm, SoftBank will likely be able to use Arm to help finance loans for new investments, in the same way a stake in Alibaba Group Holding helped SoftBank secure financing to acquire Arm in the first place.
On Wednesday, Arm gave a bullish earnings forecast that beat estimates as a push beyond smartphones to more lucrative arenas such as servers and data centers bore fruit. Arm shares soared in after-hours trading, bringing the company¡¯s value closer to $100 billion.
Skepticism remains, however, about the Vision Fund¡¯s hundreds of privately held startups. The second Vision Fund, funded entirely by SoftBank, is mired in losses after a post-pandemic slump hurt tech valuations worldwide. The first Vision Fund has had its own share of losses, including from WeWork, the startup once valued as much as $47 billion that filed for bankruptcy last year.
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