SoftBank Group is charting a bold new course, buoyed by a second consecutive profitable quarter and a soaring asset value, including a significant boost from its investment in Arm Holdings Plc. The Tokyo-based conglomerate reported better-than-expected net income for the March quarter, driven by gains in its investment portfolio and derivative contracts. The surge in Arm’s stock since its IPO last year propelled SoftBank’s net asset value to a record ¥27.8 trillion ($178 billion), nearly double the previous year’s total.
Chief Financial Officer Yoshimitsu Goto emphasized the company’s newfound financial strength, stating, “Failing to take risks constitutes the biggest risk for us.” This marks a departure from his previous role as a cautious counterbalance to founder Masayoshi Son’s ambitious vision. Goto added, “We have our sights set on a variety of challenges.”
Son, who has faced setbacks with the Vision Fund, is now redirecting his focus to AI and semiconductors. The Vision Fund is shedding assets and writing down investments, while SoftBank has amassed a substantial cash reserve of ¥6.2 trillion ($39 billion) as of March.
Son is reportedly seeking $100 billion for a chip venture to compete with industry giants like Nvidia Corp. SoftBank is also in talks to acquire Graphcore Ltd., a British semiconductor startup. Goto noted that SoftBank’s loan-to-value ratio is at a near-record low of 8.4%, well below the company’s target of 25%, indicating potential for more aggressive moves.
SoftBank posted a net income of ¥231.1 billion ($1.5 billion) for the March quarter, a stark contrast to the ¥57.6 billion ($369 million) loss a year ago. For the full year, SoftBank reported a narrower net loss of ¥227.7 billion ($1.4 billion), surpassing expectations. However, the Vision Fund reported a surprise loss of ¥96.7 billion ($619 million), primarily due to markdowns in its portfolio.
Son is increasingly channeling investments through the SoftBank holding company rather than the Vision Fund. The Vision Fund sold off $2.5 billion in assets in the fourth fiscal quarter while making minimal new investments.
To bolster its investment funds, SoftBank may consider divesting its holdings in T-Mobile, Deutsche Telekom, or Arm. Past sales of assets, such as Alibaba Group Holding Ltd. shares, have been used to finance new ventures and strengthen the balance sheet.
(Source: Financial Times | WSJ)
