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SoftBank Group failed to turn a profit for a third consecutive quarter, recording a ¥477.6bn ($3.3bn) loss for the three-month period ending in June despite a recovery at its flagship Vision Fund investment unit.
The quarterly loss in net income defied analyst predictions that the group would return to profit following a steady recovery in the tech-heavy Nasdaq index. SoftBank founder Masayoshi Son had also told shareholders in June the company was “going on the counteroffensive”, raising hopes of a revival.
Based on an average of four analysts surveyed by Refinitiv ahead of Tuesday’s results, the market had expected SoftBank to make a ¥75bn group-wide profit in the first quarter of the financial year that began in April. But the group sustained losses partly as a result of share price declines at Alibaba, Deutsche Telekom and T-Mobile.
In his earnings presentation that included a slide of an image depicting light at the end of a tunnel, SoftBank’s chief financial officer Yoshimitsu Goto said the company was going to invest with caution.
“We want to strike a good balance between the gas and the brake for our investment activities,” said Goto, who outlined plans for the company to expand its investment in artificial intelligence-related technologies.
Although SoftBank’s April-to-June loss was heavier than expected, it was significantly better than the group’s performance in the same quarter a year earlier, when it made a loss of ¥3.2tn.
Richard Kaye, a portfolio manager at Comgest and a long-term investor in SoftBank, said the company was starting to be understood again as a major innovator.
“I think SoftBank will become adventurous again, and its good and bad experiences will make it more astute,” said Kaye.
The depth of SoftBank’s losses were partially offset by an improvement at the Vision Fund unit, which booked an investment gain of ¥159.8bn due to a recovery in global tech valuations.
The gains included those attributable to subsidiaries of SoftBank, such as UK chip designer Arm.
SoftBank on Tuesday confirmed Arm’s valuation at $45.2bn at the end of June, a rise of about 13 per cent from the previous quarter.
Arm, as analysts pointed out, simultaneously recorded a 10.8 per cent year-on-year drop in sales and an overall loss of ¥9.5bn for the same three-month period. SoftBank blamed the decline on slowing revenues in the semiconductor industry.
David Gibson, a longtime SoftBank analyst at MST Financial, said the company was “once again getting creative with its presentations to spin a more positive story”.
Son is planning to float Arm in the US this year and analysts believe he may seek a valuation for the company of as much as $80bn.
Before the April-to-June period, the Vision Fund had logged five consecutive quarters of losses, battered by the sharp plunge in global tech valuations.
The Vision Fund segment, which includes Vision Funds 1 and 2 as well as the $7.6bn LatAm Funds, recorded a pre-tax profit of ¥61bn for the most recent quarter, against a ¥2.3tn loss in the same period a year earlier.