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SoftBank's Son sees ARM growing for years to come

TOKYO -- British chip design house ARM Holdings can grow for another decade or two, SoftBank Group Chairman and CEO Masayoshi Son told a news conference Monday, reiterating his confidence in the Japanese tech giant's latest big acquisition.

SoftBank's net profit surged 80% on the year to 766.2 billion yen ($7.32 billion) for the April-September half, earnings released Monday show. The increase owes to growth in domestic fiber-optic services and the restructuring of U.S. mobile carrier Sprint, as well as the sale of Finnish mobile game developer Supercell.

Son, along with President Ken Miyauchi and accounting chief Kazuko Kimiwada, spoke with reporters after the presentation.

Asked about a 170 billion yen loss on derivatives during the half, Son explained that the company had recently raised money by essentially issuing bonds convertible into Alibaba Group Holding shares. "When Alibaba's stock price goes up, it generates a derivatives-related loss on paper" because SoftBank cannot book those profits, Son said. "In exchange, we get capital gains" when the securities are converted to Alibaba shares, he added.

"There'll be a total of roughly 90 billion yen in losses over the three years" until the scheduled exchange date, Kimiwada said.

ARM was also a topic of interest, with one questioner asking what SoftBank has gained in the two months since the September acquisition. "We've visited major business partners together with ARM's management," Son replied, adding they were reassured by SoftBank's hands-off stance toward the British company.

"There were also concrete proposals to pursue medium- to long-term development programs together," he said. "The more we learn, the more we realize how amazing ARM's engineering team is and how well customers understand its technological capabilities. We're convinced ARM can keep growing for another 10 or 20 years."

Son also reiterated SoftBank's "commitment to contribute to the U.K. economy and employment" in response to a question about what the Japanese company would ask from the British government in light of the pending exit from the European Union. He positioned the "SoftBank Vision Fund," a massive Saudi-backed technology investment vehicle, as part of this effort, noting plans to base its management in the U.K.

As for the fund itself, and Son's plans for it, the chairman tied it to his vision of the future. "I believe that the singularity -- the time when computer intelligence surpasses human intelligence -- is sure to arrive," he said. "Every business will be redefined -- it'll be a huge business opportunity. By creating the fund, we can prepare to move forward on the chances we need to take."

With the U.S. presidential election looming, Son was asked about the risks SoftBank might face if Republican candidate Donald Trump is elected. Though the CEO said he would prefer to comment as little as possible before the results come out, he downplayed the impact of a Trump presidency.

"SoftBank Group does business globally," he said. "Sprint, in the U.S., is a business aimed at general consumers. The election won't have a direct impact."

Miyauchi fielded a question about the effects of Japanese government guidelines implemented in April aimed at reining in excessively cheap handset sales. "Y!mobile is expanding steadily," Miyauchi said, referring to one of the group's mobile brands. "SoftBank's churn rate is down, and it's also doing well. Of course, SoftBank's overall sales volume including upgrades has declined slightly, but it's not the sort of big drop everyone was expecting."

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