Softbank Group Corp yesterday reported a US$12 billion quarterly net profit to June, recovering from eye-watering losses as tech stocks rally and the firm sheds assets to shore up its finances.
The results would be a relief for chairman Masayoshi Son, who has faced an increasing drumbeat of criticism after record losses for the firm. Softbank holds stakes in some of Silicon Valley’s hottest start-ups through its US$100 billion Vision Fund.
The 11.9 percent rise in net profit to ￥1.26 trillion (US$11.86 billion) puts Softbank back in the black after a turbulent financial year that saw its investment woes magnified by the COVID-19 pandemic and plunges in global stock markets.
Photo: AFP
Son has insisted that his strategy is sound and that Softbank’s portfolio is broad enough to weather the storm, but acknowledged the challenges when the firm reported an eye-watering US$8.9 billion annual net loss in May, hit by the WeWork debacle and stock crashes.
The results come after Softbank launched an aggressive plan to sell up to US$41 billion in assets to finance a stock buyback, after Son said that shares were undervalued.
The fundraising was also intended to reduce the firm’s debts and increase cash reserves.
Softbank shares closed down 2.45 percent to ￥6,361 shortly before the results were announced, up significantly from their March low of ￥2,687.
The company also reported ￥983 billion in investment gains for the quarter to June, including profit from its Vision Fund.
However, Softbank said that the pandemic continued to cause uncertainty, bolstering its investments in e-commerce and food delivery firms, but hammering those in the hotel and hospitality sectors.
The firm said that it would not offer a forecast “due to numerous uncertainties affecting earnings.”
Son has struggled to interest investors in a second round of the Vision Fund, as he deals with the woes of some of his most high-profile investments, notably WeWork.
Once hailed as a dazzling unicorn valued at US$47 billion, the office-sharing start-up has suffered a stunning fall from grace.
Son stood by his investment, even upping his stake, but things began to unravel last year as WeWork hemorrhaged cash and canceled its share offering, with founder Adam Neumann pushed out.
Softbank this year scrapped a plan to buy up to US$3 billion WeWork shares as part of a restructuring program, and the start-up is suing for alleged breach of contract.
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