SoftBank Comeback Stays on Track With $6 Billion Profit
Japanese conglomerate’s Vision Funds posted big investment gains
TOKYO—Technology investor SoftBank Group Corp. 9984 5.37% logged a profit of more than $6 billion in the July-September quarter, driven by rising share prices for some of its portfolio companies.
The strong performance continues a remarkable comeback for the Japanese conglomerate—best known for its $100 billion Vision Fund—as well as its mercurial Chief Executive Masayoshi Son. Half a year ago, he said that dud investments and tanking stock prices amid the coronavirus pandemic had pushed the company into a $9 billion annual loss at the end of March, its worst ever.
In the six months ended Sept. 30, SoftBank booked an investment gain of ¥2 trillion, equivalent to $19 billion, including ¥1.3 trillion from improved performance at the Vision Fund as well as its more modest successor, Vision Fund 2.
For the July-September quarter, net profit came to ¥627.5 billion, or $6.1 billion. In the July-September quarter a year ago, SoftBank logged a $6.4 billion net loss. That was caused in part by writing down the value of its investment in office-share firm WeWork, which Mr. Son described as a lapse of judgment on his part.
One star performer this past quarter has been Chinese online real-estate broker Beike Zhaofang, a Vision Fund 2 investment whose share price has shot up since it went public in New York in August. SoftBank said it had booked paper gains of ¥537 billion on the investment.
SoftBank has been the sole funder for Vision Fund 2, after an attempt to attract outside investors flopped last year. Mr. Son has said the search for outside investors could continue once the Vision Funds’ track records improve.
Those investment returns are all the more important since SoftBank in recent months has turned itself into a purely investment-driven conglomerate. It merged Sprint Corp. of the U.S. into T-Mobile US Inc. and reduced its stake in its Japanese mobile-phone unit to less than half.
Since March, SoftBank has also been implementing one of the world’s most aggressive asset-sale and share-repurchase programs, signing more than $90 billion in deals—including a September agreement to sell U.K. chip designer Arm Holdings, to U.S. chip maker Nvidia Corp. for up to $40 billion. And it has bought back around $11 billion of its own stock so far.
SoftBank’s shares have soared, rising 5.4% on Monday to ¥7,083, equivalent to $68.49. That is more than double the stock price’s March low.
SoftBank has said it plans to buy back roughly $12 billion more in shares, and earmark a similar amount to repurchase debt and bolster its cash holdings. That still leaves the company with potentially tens of billions of dollars in surplus cash to spend.
Investors expressed concern after news came out in September that a new SoftBank asset-management arm overseen by Mr. Son himself invested billions of dollars into publicly listed tech stocks such as Alphabet Inc. and Amazon.com Inc. The new arm spent billions of dollars on options derivatives tied to some of those stocks as well.
The news pushed down SoftBank’s share price as much as 7% at the time, and left some investors wondering if Mr. Son was deviating from his long practice of taking early stakes in innovative technology startups.
In recent weeks, Mr. Son has countered such concerns in public speeches, talking about SoftBank’s latest investments in young tech companies that he believes have the potential to shake up their industries.