SoftBank Returns to Profit, Fueled by Tech Investments and AI Ambitions

SoftBank expected to book $1.87 billion profit on IPOs

TOKYO (Reuters) - Japanese technology investor SoftBank Group is expected to report a 287 billion yen ($1.87 billion) quarterly profit on Tuesday, boosted by successful portfolio company listings even as a stronger yen dampened foreign currency-denominated gains. Analysts are also looking out for signs of new investment momentum driven by SoftBank's robust balance sheet and management's bullish stance on artificial intelligence (AI). The net profit forecast for July-September is based on the average of four analyst estimates compiled by the London Stock Exchange Group, and compares with a loss of 931 billion yen in the same period last year. MST analyst David Gibson estimates an investment gain of $3.9 billion for the quarter, with the IPOs of two Indian companies - Brainbees Solutions and Ola Electric - seen generating income of $0.9 billion and $1 billion, respectively. A drop of around 10% in the value of the dollar versus the yen over the period is expected to weigh on SoftBank's bottom line. Analysts are eagerly awaiting SoftBank's investment plans, after Founder and Chief Executive Officer Masayoshi Son told an investment summit in Saudi Arabia last month that he was saving tens of billion dollars for the next big move. The pace of SoftBank's new investments is already trending upward, reaching $1.9 billion in the April-June quarter, up from $0.3 billion in January-March. In early October, SoftBank also joined in the latest funding round for ChatGPT operator OpenAI. Analysts are particularly interested in SoftBank's reported efforts to manufacture AI chips to rival market leader Nvidia, potentially through a collaboration between chip designer Arm, in which it holds a 90% stake, and recently acquired chip manufacturer Graphcore. They note that SoftBank made a deal with Arm to license its intellectual property in the most recent quarter, worth $43.2 million in revenue, which may be related. In addition, SoftBank's sound financial position makes a large-scale investment possible. It's balance sheet is "near the strongest it has been over the past five years", wrote Morningstar analyst Dan Baker in a note, adding that both S&P Global Ratings and Japan Credit Rating Agency upgraded their SoftBank credit ratings earlier this year. Although SoftBank announced a $3.4 billion share buyback three months ago, this was substantially below what some analysts had called for and leaves ample room for further investment, they added. (Reporting by Anton Bridge; Editing by Nicholas Yong)

SoftBank expected to book USD1.87 billion profit on IPOs

CNA - Japanese technology investor SoftBank Group is expected to report a JPY287 billion (USD1.87 billion) quarterly profit yesterday, boosted by successful portfolio company listings and a stronger yen. Analysts are also looking out for signs of new investment momentum driven by SoftBank's robust balance sheet and management's bullish stance on artificial intelligence (AI). The net profit forecast for July-September is based on the average of four analyst estimates compiled by the London Stock Exchange Group, and compares with a loss of JPY931 billion in the same period last year. MST analyst David Gibson estimates an investment gain of USD3.9 billion for the quarter, with the IPOs of two Indian companies - Brainbees Solutions and Ola Electric - seen generating income of USD0.9 billion and USD1 billion, respectively. A drop of around 10 per cent in the value of the dollar versus the yen over the period is expected to boost SoftBank's bottom line. Analysts are eagerly awaiting SoftBank's investment plans, after Founder and Chief Executive Officer Masayoshi Son told an investment summit in Saudi Arabia last month that he was saving tens of billion dollars for the next big move. The pace of SoftBank's new investments is already trending upward, reaching USD1.9 billion in the April-June quarter, up from USD0.3 billion in January-March. In early October, SoftBank also joined in the latest funding round for ChatGPT operator OpenAI. Analysts are particularly interested in SoftBank's reported efforts to manufacture AI chips to rival market leader Nvidia, potentially through a collaboration between chip designer Arm, in which it holds a 90 per cent stake, and recently acquired chip manufacturer Graphcore. They note that SoftBank made a deal with Arm to license its intellectual property in the most recent quarter, worth USD43.2 million in revenue, which may be related. In addition, SoftBank's sound financial position makes a large-scale investment possible. It's balance sheet is "near the strongest it has been over the past five years", wrote Morningstar analyst Dan Baker in a note, adding that both S&P Global Ratings and Japan Credit Rating Agency upgraded their SoftBank credit ratings earlier this year. Although SoftBank announced a USD3.4 billion share buyback three months ago, this was substantially below what some analysts had called for and leaves ample room for further investment, they added.

SoftBank Back in Profit on Tech Investment Gains -- 2nd Update

SoftBank Group posted a $7.7 billion quarterly profit, supported by gains in its tech investments, and is getting ready for bigger investments. The Japanese technology investment company returned to a net profit in the three months ended September, it said Tuesday, helped by gains in its stakes in e-commerce company Coupang, Chinese ride-hailing company DiDi Global and T-Mobile US, compared with a net loss in a year earlier. SoftBank Group Chief Financial Officer Yoshimitsu Goto said at a briefing that strong earnings results improve its financial footing, allowing it to make bigger investments selectively at the right time. "We are preparing to take advantage of various opportunities," he said. SoftBank invested about $500 million in OpenAI through its Vision Fund 2 when the startup behind ChatGPT raised $6.6 billion in a recent round of new funding. While the investment was modest, Goto on Tuesday described it as significant and said it will help strengthen SoftBank's relationship with OpenAI. In October, SoftBank Group Chief Executive Masayoshi Son reiterated his bullish forecasts for AI, saying he believed artificial general intelligence, in which computers have human-level cognitive abilities, would be achieved in two to three years. The company and its tech funds have begun investing more aggressively in recent months after a yearslong defensive strategy, as tech stocks have risen thanks to artificial-intelligence enthusiasm and the Federal Reserve's rate cuts. SoftBank Group reported second-quarter net profit of 1.180 trillion yen, equivalent to $7.68 billion, compared with a net loss of Y931.11 billion a year earlier. That was sharply higher than the Y199.3 billion estimated net profit in a poll of analysts by data provider Visible Alpha. SoftBank's Vision Funds business swung to a profit of Y373.14 billion from a loss of Y258.86 billion in the year-ago period. Its bottom line last year was weighed by losses related to office-sharing company WeWork's bankruptcy in the U.S. SoftBank's earnings are susceptible to fluctuations in tech stocks. It reported a first-quarter net loss after two consecutive quarters of net profits. Last week, subsidiary Arm Holdings posted a quarterly net profit of $107 million, compared with a net loss a year earlier, boosted by sales of increasingly complex chips crucial for AI applications. SoftBank Group's stake in Arm now makes up a big chunk of the Japanese investment company's portfolio after it cashed in on its stake in Alibaba Group Holding over the years and reduced its concentration in China. Shares in SoftBank have gained about 50% this year, fueled by enthusiasm over rising AI-related demand at the company's investees, including Arm. Write to Kosaku Narioka at kosaku.narioka@wsj.com

SoftBank Back in Profit on Tech Investment Gains -- Update

SoftBank Group returned to a net profit in the second quarter, supported by gains in its tech investments. The Japanese technology investment company said Tuesday that net profit was 1.180 trillion yen, equivalent to $7.68 billion, for the three months ended September, compared with a net loss of Y931.11 billion a year earlier. The result soundly beat the Y199.3 billion estimated net profit in a poll of analysts by data provider Visible Alpha. SoftBank's Vision Funds business swung to a profit of Y373.14 billion from a loss of Y258.86 billion in the year-ago period, driven by gains in its stakes in e-commerce company Coupang and ride-hailing company DiDi Global. Gains in its stake in T-Mobile US also helped the quarterly earnings. Its bottom line last year was weighed by losses related to office-sharing company WeWork's bankruptcy in the U.S. SoftBank's earnings are susceptible to fluctuations in tech stocks. It reported a first-quarter net loss after two consecutive quarters of net profits. The company and its tech funds have started investing more aggressively in recent months after a yearslong defensive strategy, as tech stocks have risen thanks to artificial-intelligence enthusiasm and the Federal Reserve's rate cuts. SoftBank invested about $500 million in OpenAI when the startup behind ChatGPT raised $6.6 billion in a recent round of new funding. In October, SoftBank Group Chief Executive Masayoshi Son reiterated his bullish forecasts for AI, saying he believed artificial general intelligence, in which computers have human-level cognitive abilities, would be achieved in two to three years. Subsidiary Arm Holdings last week posted a quarterly net profit of $107 million, compared with a net loss a year earlier, boosted by sales of increasingly complex chips crucial for AI applications. SoftBank Group's stake in Arm now makes up a big chunk of the Japanese investment company's portfolio after it cashed in on its stake in Alibaba Group Holding over the years and reduced its concentration in China. SoftBank's stock has gained about 50% this year, fueled by enthusiasm over rising AI-related demand at the company's investees, including Arm. Write to Kosaku Narioka at kosaku.narioka@wsj.com

SoftBank returns to profit as Indian IPOs boost Vision Fund gains

Masayoshi Son's SoftBank Group swung to a ¥1.2tn ($7.8bn) profit in its latest quarter, driven by a string of successful initial public offerings in India and better tech valuations. The company's results easily beat analysts' forecasts for a profit of just ¥286.8bn and comes after a ¥931bn loss in the September quarter last year and a ¥174.3bn loss in its previous quarter. The rebound was helped by a strong fiscal second quarter for its risk-taking and tech-heavy Vision Funds, which reported a gain on investments of ¥608bn. Chief financial officer Yoshimitsu Goto said on Tuesday that the cumulative investment gains for the Vision Funds had now "turned positive for the first time in nine quarters. I believe that is a big message for us." Kirk Boodry, a SoftBank analyst at Astris Advisory in Tokyo, said it was the Vision Funds' public portfolio's best quarter since the end of 2020, with IPOs in India lifting valuations by $1.7bn. SoftBank saw a string of its investment companies -- including e-scooter maker Ola Electric and baby products retailer FirstCry -- go public in an "August Harvest season in India", said Devi Subhakesan, an independent analyst from Investory who publishes on Smartkarma. Subhakesan said SoftBank could eventually see its $450mn investment in Indian food delivery group Swiggy jump in value through its IPO this week, although investors have been giving the company a lukewarm reception as it tries to grow in a fiercely competitive sector. SoftBank benefited from valuation gains at South Korean ecommerce group Coupang and Chinese ride-hailing company DiDi, which it said was helped by interest rate cuts and Chinese stimulus measures. There was also a positive impact on net income from the weak yen. The results will drive speculation about Son's wider plan to invest billions of dollars to produce chips for artificial intelligence and put his group at the heart of what he considers humanity's next step. "I feel the clock is really starting to tick now. Masa said recently that advanced AI is two to three years away so he has to be in a hurry to get his plan under way. He must be feeling pressure," said Boodry. SoftBank's cash position has fallen since the past quarter but still sits at ¥3.8tn, which Goto said "enabled further AI investments". Its share price is up 55 per cent so far this year, despite a steep fall in August during a record rout of the Tokyo stock market, with SoftBank helping to arrest its fall by announcing plans to buy back up to ¥500bn of its stock. Son's ambitious plan -- which runs through from chip production and software to providing power for data centres -- could put its crown jewel, the UK chip designer Arm, into direct competition with Nvidia, a key customer. Son is due to appear in a fireside chat with Nvidia's chief executive Jensen Huang on Wednesday morning in Tokyo. The SoftBank founder stepped back from presenting earnings results more than a year ago. SoftBank's second Vision Fund, which is now mostly home to Son's own money, has also agreed to invest $500mn into OpenAI as the group increasingly targets its investments on AI.