TOKYO -- SoftBank Group on Tuesday reported a net profit of 1.25 trillion yen ($11.8 billion) in the April-June quarter thanks to the merger and sale of its stake in U.S. mobile carrier Sprint and a recovery in its $100 billion Vision Fund, marking a return to profit after its worst ever loss in the previous quarter.
The turnround in valuations and completion of the long-sought Sprint deal have been a balm for Masayoshi Son, SoftBank founder and chairman, who only months ago plunged the group into a series of asset sales to try to quell investor concern over its deteriorating balance sheet.
But Son said stockpiling cash would remain a priority until the coronavirus pandemic is under control.
"Defence is essential in a battle," Son said in a live-streamed presentation, citing how Japanese warlord Nobunaga used fences to help samurai soldiers defend themselves against opponents on horseback. "For SoftBank, which has various debts, defense is cash."
"We don't know if there will be second and third waves of coronavirus," he added. "But we consider this to be a crisis situation until vaccines and antibodies are distributed, and we fully overcome the corona crisis."
Son said on Tuesday that SoftBank had now raised 4.3 trillion yen from what was billed as a 4.5 trillion yen program to monetize some assets, which also included its crown jewel stake in Alibaba Group Holding. SoftBank has used some of the proceeds to buy back its own shares, helping to cement a revival in its stock price.
His cautious outlook underlined SoftBank's fragile earnings rebound, which was mostly thanks to one-off items. SoftBank posted a 736 billion yen profit from merging Sprint with T-Mobile in April, as well as a 421 billion yen profit from a subsequent deal to sell some of its shares in T-Mobile.
SoftBank's near $100 billion Vision Fund also helped reverse the losses, with an investment gain of 296 billion yen, thanks to mostly unrealized gains in the value of its 86 portfolio companies. These include U.S. ride-sharing company Uber Technologies and biotech firm Vir Biotechnology.
"It may be too early to say that [the Vision Fund] will always be profitable going forward. However, it is steadily improving from the worst situation," Son said.
At the same time, however, Son announced the establishment of a $555 million investment arm that invests in liquid, listed tech stocks like Amazon, Apple and Facebook. The structure is a sharp contrast to the Vision Fund, which invested billions of dollars in privately held companies at lofty valuations.
Son also confirmed that SoftBank is contemplating a sale of Arm, the UK chip design group that it bought in 2016. Son said he would not comment on media reports that SoftBank was in talks with Nvidia, the U.S. chipmaker. He said a partial or complete sale or a relisting of Arm on an exchange were all options.
The results from the group's first quarter underline how much of Softbank's fortunes now depend on its investment portfolio rather than its operating businesses such as its Japan telecoms unit of the same name. SoftBank said on Tuesday that it would no longer present its "operating income" in its consolidated income statements, saying it was more appropriate to use gains or losses on investments to show its investment performance.