Profit

SoftBank switches to second-quarter earnings but unveils more pain at Vision Fund with FTX writedown

By Kiyoshi Takenaka

TOKYO (Reuters) – Japan’s SoftBank Group Corp reported its first quarterly profit in three quarters, buoyed by the sale of part of its stake in China’s Alibaba, even as its huge Vision Fund unit posted another hefty quarterly loss.

The sprawling Vision Fund, which has turned the tech world upside down with its big bets on startups, will also cut its investments in struggling crypto exchange FTX to zero, a source close to SoftBank said. The source said these investments amounted to less than $100 million.

The FTX complications mark the latest struggle for Vision Fund, which has been hammered in recent quarters by a global tech rout, prompting SoftBank chief executive Masayoshi Son to drastically cut new investments.

The source said the bailout of FTX, which was valued at $32 billion in January but is now striving to raise around $9.4 billion, would be a question for big investors as the tech conglomerate grows. cuts to reduce costs and refocuses on managing its existing portfolio.

Vision Fund plans to cut its workforce by more than 30%, its chief financial officer Navneet Govil told analysts on Friday.

Vision Fund’s investment losses totaled 1.38 trillion yen ($9.75 billion) in the three months to September 30 as the value of its portfolio continued to decline. That brought the fund’s total cumulative investment loss to around $60 billion in the nine months to the end of September.

Son told a briefing that this would be the last time he would speak at a post-benefit briefing for “the foreseeable future”, adding that he had no health issues and that he would focus his extra time and energy on business opportunities related to British chip designer Arm. .

“For at least the next few years, I plan to focus solely on Arm’s next explosive growth, while other companies (SoftBank) will remain on the defensive,” Son said. “I’m good in attack by nature. I would like to focus on attack for Arm.”

Son outlined plans to list Arm in the US after the sale to Nvidia collapsed, and the source close to the company said on Friday the listing likely won’t happen until the end of the fiscal year. in March 2023.

It is still targeting an IPO next year, Arm vice chairman Ian Thornton said.

SoftBank itself is synonymous with Son, which, with its bold bets on everything from Chinese tech to startups like WeWork, has charted a path very different from any other Japanese company.

At SoftBank itself, net profit was 3.03 trillion yen in the second quarter from July to September. In the first quarter, the group had recorded a loss of 3.16 trillion yen.

Days after disclosing the massive first-quarter loss, SoftBank said it would trim its stake in Alibaba Group Holdings to around 15% from around 24% by settling prepaid futures and post an estimated $4.6 trillion gain. of yen in the second quarter.

Over the past quarter, the value of some of SoftBank’s listed investments has fallen, including its stakes in U.S. real estate brokerage Compass and Indonesia’s largest tech company GoTo, while South Korean e-commerce firm Coupang was among winners.

Shares of SoftBank closed 1.8% higher than where they were trading before the earnings announcement, trailing a 3% rise in the broader market.

($1 = 141.5400 yen)

(Reporting by Kiyoshi Takenaka; Editing by David Dolan, Bradley Perrett and Simon Cameron-Moore)