Tokyo: softbank Groupe Corp. reported a 97% drop in quarterly profits on Tuesday and the collapse of a deal to sell the chip designer arm worth more than $60 billion, mounting pressure on the Japanese conglomerate to support its looser shares.
SoftBank reported that it had reduced net profit of 29 billion yen ($251 million) in the October to December quarter, while its portfolio rallied compared to a record profit of 1.17 trillion yen booked a year earlier.
Separately, SoftBank announced that the sale of Arm to Nvidia had fallen amid regulatory hurdles in a major setback to its fund-raising plans.
The Japanese investment giant said it would recognize the $1.25 billion breakup fee that Nvidia accrued as profit in the fourth quarter.
The Vision Fund unit posted an investment profit of 111.45 billion yen during the quarter, a sharp decrease from a 1.4 trillion yen profit a year earlier.
“Although some public companies have lost value, there have been significant follow-on funding rounds where external institutional investors have led those rounds,” Navneet Govil, chief financial officer at Vision Fund, told Reuters.
Several SoftBank portfolio companies are trading below their listing prices, with office-sharing firm WeWork, ridehailer Grab and used-car platform Auto1 all falling during the quarter.
The group’s exposure to China has also affected performance, as regulators take action against tech firms. Shares of e-commerce giant Alibaba, in which SoftBank holds a stake, fell a fifth in the three months to the end of December.
Such assets are used by the group for loans as it invests through its Vision Fund unit, which runs the $100 billion Vision Fund and a smaller second fund and has become a priority for the group.
Vision Fund 2, which had $51 billion in committed capital at the end of December, invested $43.1 billion in more than 200 startups. Industry observers have noted a connection between foamy private markets and skepticism in public markets.
“We are seeing some healthy rebalancing at some of the extreme ends of the market,” Govil said. “We turned down some transactions because we thought the valuation was rich.”
The earnings come at a crucial moment for the group as senior executives exit the firm, including Chief Operating Officer Marcelo Clare, who led the restructuring of WeWork and launched the group’s Latin American-focused fund.
SoftBank launched a 1 trillion yen buyback in November. The group’s shares closed 0.9% ahead of earnings and have fallen nearly half since their highs in March last year.
SoftBank reported that it had reduced net profit of 29 billion yen ($251 million) in the October to December quarter, while its portfolio rallied compared to a record profit of 1.17 trillion yen booked a year earlier.
Separately, SoftBank announced that the sale of Arm to Nvidia had fallen amid regulatory hurdles in a major setback to its fund-raising plans.
The Japanese investment giant said it would recognize the $1.25 billion breakup fee that Nvidia accrued as profit in the fourth quarter.
The Vision Fund unit posted an investment profit of 111.45 billion yen during the quarter, a sharp decrease from a 1.4 trillion yen profit a year earlier.
“Although some public companies have lost value, there have been significant follow-on funding rounds where external institutional investors have led those rounds,” Navneet Govil, chief financial officer at Vision Fund, told Reuters.
Several SoftBank portfolio companies are trading below their listing prices, with office-sharing firm WeWork, ridehailer Grab and used-car platform Auto1 all falling during the quarter.
The group’s exposure to China has also affected performance, as regulators take action against tech firms. Shares of e-commerce giant Alibaba, in which SoftBank holds a stake, fell a fifth in the three months to the end of December.
Such assets are used by the group for loans as it invests through its Vision Fund unit, which runs the $100 billion Vision Fund and a smaller second fund and has become a priority for the group.
Vision Fund 2, which had $51 billion in committed capital at the end of December, invested $43.1 billion in more than 200 startups. Industry observers have noted a connection between foamy private markets and skepticism in public markets.
“We are seeing some healthy rebalancing at some of the extreme ends of the market,” Govil said. “We turned down some transactions because we thought the valuation was rich.”
The earnings come at a crucial moment for the group as senior executives exit the firm, including Chief Operating Officer Marcelo Clare, who led the restructuring of WeWork and launched the group’s Latin American-focused fund.
SoftBank launched a 1 trillion yen buyback in November. The group’s shares closed 0.9% ahead of earnings and have fallen nearly half since their highs in March last year.
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