SoftBank Returns to Health as Silicon
Valley and Chip Investments Prosper
Technology investor’s shares rise 11% on the
back of higher revenue at its chip-design subsidiary
SoftBank Group reported its first profit in more than a year during the October-December
quarter, helped by a revival in Silicon Valley that drove up the value of SoftBank’s
a net profit of 950 billion yen, equivalent to $6.4 billion, for the three months
ended Dec. 31, marking its first quarterly profit after four consecutive
quarters of losses. It had lost nearly that much in the same period a year earlier.
SoftBank’s net asset
value, which the company has identified as a favored barometer
of its performance, increased in each quarter of 2023 to end the year at ¥19.2 trillion,
equivalent to $129 billion at the current exchange rate.
“We are experiencing
a dynamic shift in our portfolio,” said SoftBank’s chief financial officer, Yoshimitsu Goto. He said SoftBank’s
Arm Holdings, accounted
for nearly a third of the group’s assets while investments in its tech-focused Vision
Funds made up 38%. Its stake in Chinese internet company Alibaba, which made up
half of SoftBank Group’s assets at the end of 2019, has been reduced to virtually
Goto said the change reflected SoftBank’s move
to lower exposure to China and its focus on artificial intelligence.
Profit in the latest
quarter was partly driven by gains in the Vision Funds segment consisting of the
SoftBank Vision Fund 1, which ended new investments in 2019, as well as SoftBank
Vision Fund 2 and Latin American funds. The Vision Funds recorded a $4 billion investment
gain in the quarter.
have regained ground recently as inflation shows signs of moderating globally and
the Federal Reserve has suggested it is done with interest-rate increases.
SoftBank Group shares
closed up more than 11% in Tokyo trading on Thursday, which ended before the results
were announced. That followed an after-hours surge in shares of Arm Holdings, which
went public in the U.S. last year.
Arm on Wednesday
projected $850 million to $900 million of sales in the three months ending in March,
higher than analyst forecasts.
“Arm is the company
that can contribute the most to AI, which is the biggest theme in the world,” Goto said. He declined to say whether SoftBank planned further
sales of Arm shares, but he said the group could make use of the shares in raising
SoftBank Group said
in September that it kept a roughly 90% stake in Arm after the initial public offering.
The share price of Arm has surged since the IPO amid global enthusiasm for semiconductor
shares, especially those connected to AI applications.
Among strong performers
in SoftBank’s portfolio, Goto cited TikTok owner ByteDance, which is part
of the Vision Fund 1. Goto said Vision Fund 2 was focusing
on smaller AI deals such as an investment in Tractable, a London-based company that
is working on AI-powered automation of insurance claims and damage assessments.
The Vision Funds
unit invested $100 million during the October-December quarter, less than the previous
quarter, but Goto said there was no change in the company’s
stance of more actively looking for investment opportunities after years of playing
SoftBank Chief Executive
Masayoshi Son, formerly a regular presenter at the company’s quarterly earnings
meetings, again stayed out of the spotlight Thursday. He has said he wants to focus
on Arm’s business and innovations in artificial intelligence.