The recovery caps one of the most tumultuous periods for the Japanese technology conglomerate founded by Masayoshi Son. Three consecutive quarters of operating losses forced SoftBank to earlier this year embark on a $41bn asset sale programme to fund share buybacks and reduce debt against the backdrop of the coronavirus pandemic.
For the April to June quarter, SoftBank reported a net profit of ¥1.25tn ($12bn) compared with a net loss of ¥1.4tn in the previous quarter. That was above analysts’ forecasts for a net profit of ¥750bn, according to S&P Global Market Intelligence. Profits were also boosted by the partial sale of its stake in the newly combined mobile company consisting of its US unit Sprint and larger rival T-Mobile.
The $100bn Vision Fund, which suffered an $18bn blow in the previous quarter, eked out an investment gain of $2.8bn. That was thanks to a buoyant US stock market with shares in ride-sharing group Uber and workplace messaging app Slack rising 11 per cent and 16 per cent, respectively, during the three months.
The Vision Fund’s fortunes have also benefited from strong initial public offerings in the US market. SoftBank’s $300m investment in home insurance start-up Lemonade is now worth more than $1bn.
Since announcing a disposal programme in mid-March that was triggered by a collapse in SoftBank’s shares, the company has raised 95 per cent of the promised amount and spent ¥1tn buying back its own shares. That has helped lift its stock price by 137 per cent.
After selling down its stakes in Chinese ecommerce group Alibaba and its Japanese telecoms business, the company is now also in talks with US chip company Nvidia for a sale of UK chip designer Arm. A deal would value the unit at more than $32bn, according to people with direct knowledge of the matter.
Still, Kirk Boodry, a tech analyst at Redex Holdings, said it was too early to be bullish about the SoftBank’s recovery especially in light of uncertainty created by rising US-China frictions.
Tensions between the world’s two largest economies has cast a cloud over the Vision Fund’s investment in ByteDance, the Chinese owner of popular social media platform Tik Tok. ByteDance is in talks with Microsoft over a potential sale of its US arm in order to comply with demands from the Trump administration.
“You had a record amount of quantitative easing and access to liquidity pushing the market over the last four months,” said Mr Boodry, who publishes on research platform Smartkarma, of SoftBank’s quarterly performance. “It’s a good quarter that takes a lot of pressure off but this doesn’t prove anything yet.”