What’s going on?
Japanese conglomerate SoftBank reported its first quarterly profit in nearly a year on Friday, but the result papered over some deeper issues.
What does this mean?
Firms and folk alike saw their investment portfolios take a pummeling last quarter, and SoftBank’s Vision Fund business – which oversees the world’s biggest tech-focused investment funds – was no exception. In fact, the Japanese firm admitted nearly $10 billion in investment losses last quarter, after being burned by tear-inducing stock dips from the likes of DoorDash, Chinese AI firm SenseTime, and Indonesian e-commerce company GoTo. But SoftBank had an ace up its sleeve: the firm auctioned off a big chunk of its stake in Alibaba, which brought in enough cash to turn a $20-billion profit – that’s a pretty nifty cheat code, and it prompted a quick turnaround from its record loss the quarter before.
Why should I care?
For markets: ARM’s dealer.
Scratch the Alibaba sale from the ledger, and you’ll find that last quarter was another tough one for SoftBank. That might be why the firm’s doubling down on plans to polish up chip designer ARM and take it public next year. See, after a deal to sell the firm fell apart earlier this year, SoftBank’s determined to make a success of this latest gambit – so much so that SoftBank’s founder announced he’s soon going to focus solely on the project.
The bigger picture: Private browsing.
SoftBank’s been using some of that sweet Alibaba cash to fund share buybacks, which have helped push its share price up 40% since the start of this quarter. In fact, the speed of the buybacks has sparked rumors that the founder might be leading a management buyout of the firm. That could be a savvy move too: taking the firm private would let SoftBank sidestep the limelight and focus all its energies on boosting performance.
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Originally Posted November 11, 2022 – SoftBank, Hard Times
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