Softbank Earnings Beat Estimates On Shift To Deals, Investing
Softbank reported a 50.1 percent rise in first-quarter profit as the firm’s earnings are starting to reflect its transition into a company that invests and makes deals.
The internet and telecoms giant said operating profit for the quarter through June increased to 479.2 billion yen ($4.33 billion). , as U.S. unit Sprint Corp. returned to profit for the first time in three years. Sales came in at 2.19 trillion yen, matching predictions, the Tokyo-based company said in a statement on Monday.
The company’s operating profit beat estimates after it included Vision Fund, the world's largest private equity fund, as a new reportable segment and booked a valuation gain.
SoftBank’s founder Masayoshi Son has long relied on earnings from Japanese wireless and telecom operations, using the money to make acquisitions and investments.
The billionaire is in the process creating the $100 billion SoftBank Vision Fund, which was included in the results for the first time, to speed up investments in technology startups abroad. And the dealmaking is set to continue, with Sprint said to be back in merger talks with T-Mobile US Inc.
SoftBank is a productive investor in technology startups, with founder and chief executive officer Masayoshi Son instrumental in creating Vision Fund.
Recent investments include U.S. online lender Kabbage Inc, which on Thursday said it had received a $250 million from SoftBank.
SoftBank also has a foothold in the U.S. market through its wireless unit Sprint Corp., which last week reported a quarterly profit for the first time in three years as a results of cost cutting efforts.
Highlighting the notion that SoftBank is becoming more of an investor, the Tokyo-based company reported losses on derivatives of 257 billion yen, which pushed net income to 5.5 billion yen, well below estimates.
The loss was related to a financial arrangement a year ago to sell shares in Alibaba Group Holding Ltd. through a trust in order to raise funds. Since then, Alibaba’s stock has gone up more than 80%, forcing SoftBank to be aware of the difference.
SoftBank’s shares have climbed 16% this year and closed at 9,023 yen on Monday. The Japanese wireless operator has a market value of about 9.9 trillion yen, while its public shareholdings are worth 17.1 trillion yen.
Son has maintained for years that his company is undervalued, urging investors to see SoftBank as a “goose with more golden eggs in its belly.”