SoftBank Saw Light At The End Of The Tunnel

SoftBank Saw Light At The End Of The Tunnel
Daniel Johnston

7 months ago2 mins

Mentioned in story

What’s going on here?

SoftBank’s Vision Fund saw the light at the end of the tunnel last quarter – but other parts of the company were stuck in the dark.

What does this mean?

SoftBank’s Vision Fund segment hasn’t had it easy lately – but after enduring five straight loss-making quarters and last year’s chilling $30 billion loss, it finally set things to rights last quarter. Thanks to a tech sector rebound and easing interest rate jitters, the fund managed to scrape together a profit. But don’t pop the champagne just yet: despite the Vision Fund’s comeback, SoftBank’s overall performance was still in the red, missing the mark set by optimistic analysts. The culprits: a trio of declining shares from T-Mobile, Deutsche Telekom, and Alibaba. On the bright side, though, this quarter’s losses were still a marked improvement on the same period last year.

SoftBank profit
Source: Nikkei Asia

Why should I care?

Zooming in: Twice shy.

The Vision Fund’s swing back to profit is notable, especially after a year of investment dormancy. And now SoftBank’s days on the investment sidelines seem numbered. With a hefty stash of cash on hand, the firm’s setting its sights on the next big thing – think AI and other tech goodies. In fact, it dove in with almost $2 billion in investments last quarter. But remember, SoftBank’s been burned before with hasty bets, so it’s planning to play it a tad more carefully this time.

The bigger picture: Armed and dangerous.

SoftBank is back to investing, but all eyes are on Arm’s impending stock market entry, a move set to boost SoftBank’s deal-making funds. But there is one wrinkle: see, despite SoftBank’s own valuation of the chip designer jumping 13% last quarter from the quarter before, Arm’s sales dipped 11% on an annual basis due to inventory buildup and a smartphone industry slowdown. That’s not a deal-breaker, but it could make potential investors think twice as Arm’s listing approaches.

Arm IPO
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