© Reuters. FILE PHOTO: A woman using a cell phone walks past the SoftBank Corp logo in Tokyo
By Sam Nussey
TOKYO (Reuters) – SoftBank Group Corp broke tradition on Tuesday by not reporting an operating profit in its quarterly results. The measure was "not useful" to measure performance and instead pointed to a profit of $ 2.8 billion on their Vision Fund.
Managing director Masayoshi Son has long highlighted the total value of assets as his preferred yardstick. By dumping the operating profit, he was able to fuel investor complaints about a company that had long been considered opaque and difficult to value.
The investment gain of 297 billion yen ($ 2.80 billion) in the April-June quarter was due to asset sales and the upward valuation of its portfolio, SoftBank said Tuesday.
But Son, known for his relentless optimism, warily occupied the business in the COVID-19 era, saying the company was heading in a defensive direction.
"Every day is like a war," he said at a profit briefing. "Cash is our defense."
Analysts had expected SoftBank to post operating profit for the first quarter on Tuesday after posting three consecutive quarters of loss. Last fiscal year, the Japanese conglomerate suffered a record operating loss after massive write-downs on its $ 100 billion Vision fund.
The fund is benefiting from a global rally in technology stocks and the demand for listings. Portfolio company Lemonade Inc made its debut in July and BigCommerce Holdings Inc stocks fell last week. Further listings are planned.
At the end of June, the Vision Fund invested $ 75.2 billion in 86 startups for $ 71.5 billion. The value of the portfolio fell below cost in the fourth quarter through March.
SoftBank provides few details on how ratings are calculated. The first quarter profit was pointed to sectors such as e-commerce and grocery delivery, which increased during the coronavirus outbreak.
According to SoftBank, the fund reduced its stakes in four publicly traded portfolio companies and left three unlisted companies between April and June. The companies were not identified.
Profits also came from the sale of assets such as wireless operator T-Mobile US (NASDAQ 🙂 Inc following its merger with Peer Sprint.
Asset sales increased 4.3 trillion yen, according to SoftBank.
According to the media, the chip designer arm is also for sale. The business lost money under Son & # 39; s watch and losses deepened in the April-June quarter.
SoftBank has backed its share price with a massive buyback plan that is funded from asset sales.
The stock fell 2.5% ahead of earnings announcement, versus a 1.9% gain in the benchmark index. The stock is up nearly 140% since the March low.
SoftBank posted net income up 12% to 1.3 trillion yen from April to June.
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