Investments

SoftBank Takes $2B Hit In Quarterly Earnings

SoftBank’s quarterly profit dropped 99 percent to ¥2.59 billion (£18.2 million) following steep Vision Fund losses, according to multiple reports on Wednesday (Feb. 12). The Vision Fund lost 225.1 billion yen (S$2.84 billion) for the three months ending in December, according to The Business Times.

The results are anticipated to escalate anxieties that founder Masayoshi Son has lost his touch when it comes to finding investors to back a second Vision Fund. The poor showing could also solidify the $3 billion stake that U.S. hedge fund activist investor Elliott Management has in SoftBank. 

Overall, SoftBank reported a profit of about $501 million for the quarter, missing analysts’ expectations. Its profit was less than one-tenth of last year’s earnings. 

Son said his company was already turning the corner, pointing to a price rally following the Tuesday (Feb. 11) news that SoftBank’s merger of Sprint Corp and T-Mobile beat its antitrust challenge. SoftBank’s stock hit its highest price in seven months, up 12.4 percent.

“At the last earnings briefing, I used the words ‘I regret’ 20 times. But after a difficult winter always comes spring. The tide is turning,” Son told a briefing following the release of SoftBank earnings. He added that the Vision Fund is on track to return to profit in the current quarter.

SoftBank, however, is still straining to boost shareholder value after Elliott Management complied stake in the company of nearly $3 billion and is campaigning for a $20 billion buyback in stock, among other changes. 

The New York-based Elliott fund was founded by billionaire Paul Singer.

Son called Singer’s Elliott Management Corp. an “important partner,” stating that the two were in talks several weeks ago. 

“We are thankful that such a distinguished investor has joined us as a friend,” Son said at a press conference in Tokyo to discuss earnings. “We are basically in agreement on carrying out large buybacks when the finances allow it.”

SoftBank announced last week that it was not going to meet its financing goal for its follow-up fund, Vision Fund 2. Without money, the group’s Vision Fund could get rid of some of its 500-person staff.

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