SoftBank’s Profit Beat Shows Its Vision Fund Is Delivering

(Bloomberg) -- SoftBank Group Corp. reported first-quarter profit that beat the highest analyst estimate thanks to valuation gains from Vision Fund investments such as Slack Technologies Inc.Operating income in the three months ended June slipped 3.7% to 688.8 billion yen ($6.5 billion), the Tokyo-based company said Wednesday. That’s more than the 345.3 billion yen average of analyst estimates compiled by Bloomberg.Masayoshi Son has been remaking SoftBank from primarily a telecommunications operator into a technology investment firm, and his $100 billion Vision Fund has emerged as a major contributor to earnings. The pending sale of SoftBank’s U.S. wireless unit Sprint Corp. to T-Mobile USA Inc. would accelerate the transition. Last month, Son announced that he aims to raise a total of $108 billion for a second enormous fund.“The Vision Fund has become a major contributor to profit, but it’s also difficult to predict on quarterly basis,” Anthea Lai, a Bloomberg Intelligence analyst, said ahead of the release. “Even more than the earnings themselves, investors will be looking to hear what Son has to say at the briefing. There is a lot of interest in Vision Fund 2.”The Vision Fund and SoftBank’s own Delta Fund contributed 397.6 billion yen to profit in the quarter, accounting for more than half of the total. SoftBank booked valuation gains on its stakes in Slack, which went public in June, Indian hotel chain OYO Rooms and food-delivery app DoorDash Inc. The gains were offset by a 195.3 billion yen decline in the fair value of holdings including Uber Technologies Inc. Additional investments in the quarter totaled $6.2 billion.SoftBank said the fund held 81 investments worth about $66.3 billion. The portfolio added $15.9 billion in value relative to the cost at which SoftBank acquired the stakes. The Japanese company also rolled over its earlier investments in Ola and WeWork for $950 million, or about 37% more than the acquisition cost.Investors await details on just how Son intends to expand his investment empire.Last month, the billionaire announced that he aims to raise $108 billion for a second Vision Fund. SoftBank is committing $38 billion in capital itself and expects to collect money from Apple Inc., Microsoft Corp., Foxconn Technology Group and the sovereign wealth fund of Kazakhstan. He also won broad support from Japanese financial institutions, with seven of them identified as signing memorandums of understanding to participate.SoftBank Corp., the conglomerate’s domestic telecoms unit, this week reported operating profit gained 3.7% in the quarter as sales grew 5.8%. The company, which has 35 million mobile subscribers, is bracing for increased competition as e-commerce giant Rakuten Inc. plans to enter the Japanese wireless market in October. SoftBank kept its full-year profit and revenue forecasts unchanged.(Updates with Vision Fund details from the fifth paragraph.)To contact the reporter on this story: Pavel Alpeyev in Tokyo at [email protected] contact the editors responsible for this story: Edwin Chan at [email protected], Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P. Read More...

(Bloomberg) — SoftBank Group Corp. reported first-quarter profit that beat the highest analyst estimate thanks to valuation gains from Vision Fund investments such as Slack Technologies Inc.

Operating income in the three months ended June slipped 3.7% to 688.8 billion yen ($6.5 billion), the Tokyo-based company said Wednesday. That’s more than the 345.3 billion yen average of analyst estimates compiled by Bloomberg.

Masayoshi Son has been remaking SoftBank from primarily a telecommunications operator into a technology investment firm, and his $100 billion Vision Fund has emerged as a major contributor to earnings. The pending sale of SoftBank’s U.S. wireless unit Sprint Corp. to T-Mobile USA Inc. would accelerate the transition. Last month, Son announced that he aims to raise a total of $108 billion for a second enormous fund.

“The Vision Fund has become a major contributor to profit, but it’s also difficult to predict on quarterly basis,” Anthea Lai, a Bloomberg Intelligence analyst, said ahead of the release. “Even more than the earnings themselves, investors will be looking to hear what Son has to say at the briefing. There is a lot of interest in Vision Fund 2.”

The Vision Fund and SoftBank’s own Delta Fund contributed 397.6 billion yen to profit in the quarter, accounting for more than half of the total. SoftBank booked valuation gains on its stakes in Slack, which went public in June, Indian hotel chain OYO Rooms and food-delivery app DoorDash Inc. The gains were offset by a 195.3 billion yen decline in the fair value of holdings including Uber Technologies Inc. Additional investments in the quarter totaled $6.2 billion.

SoftBank said the fund held 81 investments worth about $66.3 billion. The portfolio added $15.9 billion in value relative to the cost at which SoftBank acquired the stakes. The Japanese company also rolled over its earlier investments in Ola and WeWork for $950 million, or about 37% more than the acquisition cost.

Investors await details on just how Son intends to expand his investment empire.

Last month, the billionaire announced that he aims to raise $108 billion for a second Vision Fund. SoftBank is committing $38 billion in capital itself and expects to collect money from Apple Inc., Microsoft Corp., Foxconn Technology Group and the sovereign wealth fund of Kazakhstan. He also won broad support from Japanese financial institutions, with seven of them identified as signing memorandums of understanding to participate.

SoftBank Corp., the conglomerate’s domestic telecoms unit, this week reported operating profit gained 3.7% in the quarter as sales grew 5.8%. The company, which has 35 million mobile subscribers, is bracing for increased competition as e-commerce giant Rakuten Inc. plans to enter the Japanese wireless market in October. SoftBank kept its full-year profit and revenue forecasts unchanged.

(Updates with Vision Fund details from the fifth paragraph.)

To contact the reporter on this story: Pavel Alpeyev in Tokyo at [email protected]

To contact the editors responsible for this story: Edwin Chan at [email protected], Vlad Savov

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