SoftBank breaks losing streak with $6.6 billion profit in Q4, buoyed by investment gains

SoftBank Q4 profit: SoftBank Group marked a significant turnaround on Thursday, announcing a net profit of 985.5 billion yen ($6.6 billion) in the October-December quarter, ending a streak of four consecutive quarters in the red. The surge in profitability was attributed to the appreciation in the value of certain investments.

This impressive net profit, compared to a loss of 744.7 billion yen in the same period a year ago, underscores SoftBank's resurgence after facing challenging times in recent quarters.

The company's success was anticipated, as analysts predicted SoftBank would return to profitability for the first time in five quarters. Expectations were fuelled by strong gains in the value of its listed assets, with some analysts forecasting a profit ranging between 282 billion yen to 460 billion yen ($1.9 billion to $3.1 billion).

One of the notable contributors to SoftBank's profitability was the anticipated $1.9 billion gains on the T-Mobile shares it received as part of a deal involving the sale of Sprint to T-Mobile in 2020. However, uncertainties lingered over the company's non-listed assets, particularly in its Vision Fund 2, as analysts did not anticipate major revaluations amid relatively quiet capital markets in the past quarter.

SoftBank's resurgence comes as a welcome development for its founder, Masayoshi Son, following setbacks including the failure of WeWork and a downturn in the valuation of its tech startups. To bolster its financial position, SoftBank divested a significant portion of its stake in Chinese e-commerce giant Alibaba.

With a substantial cash position of 5.1 trillion yen ($34.5 billion) as of end-September, investors have high expectations for SoftBank to initiate share buybacks. The company has a history of utilising buybacks to address trading discounts to its net asset value.

While SoftBank has resumed investing cautiously, questions remain about its future investment strategy, particularly in AI startups. The company has set stringent criteria for investments, prioritising quality and valuation. Analysts are eager for clarity on SoftBank's investment plans and its approach to potential buybacks.

SoftBank's stake in chip designer Arm, which surged 40 per cent in value between its IPO in September and December, could also play a pivotal role in funding investments or buybacks. However, as a consolidated subsidiary, the gains from Arm's surge will not be reflected in SoftBank's investment gains in net profit.

(With Reuters inputs.)