Masayoshi Son, Chairman and CEO of SoftBank Group at the SoftBank World 2018 event in Tokyo, Japan.
Kiyoshi Ota | Bloomberg | Getty Images
SoftBank Group posted a quarterly profit of $ 12 billion on Tuesday after reporting historic losses of $ 13 billion for its last fiscal year.
The recovery is largely down to increasing valuations of bets from SoftBank Vision Fund such as Uber and Slack, who saw their share price rally between April and June quarter when U.S. tech stocks increased during the coronavirus pandemic.
The SoftBank Vision Fund, which reported a $ 18 billion loss last year, recorded an investment gain of $ 2.8 billion for this quarter.
The performance of the Vision Fund has been further enhanced by new list of shares in the start-up Lemonade of the US Home Insurance, which SoftBank supports with $ 300 million, is now valued at more than $ 1 billion, for example.
SoftBank also increased its share price with a share purchase plan. In March, the company said it planned to sell $ 41 billion in assets to repurchase shares in the company and reduce debt.
It diminished its stake in Alibaba and its Japanese telecom unit. It is now considering selling UK chip designer ARM, for which it paid $ 32 billion, to US chip giant Nvidia, according to people familiar with the matter.
SoftBank Chief Executive Masayoshi Son confirmed that the company on Tuesday is exploring options for chip designer ARM, adding that it is considering selling a share if any ARM, or taking ARM public.
Uncertainties of Vision Fund
The first Vision Fund, launched by Son in 2017, shocked the tech investment community because of its huge size. At $ 100 billion, it was several orders of magnitude larger than any other tech investment fund including those of Silicon Valley heavyweights such as Sequoia and Andreessen Horowitz. More than half of the money comes from contributors such as Apple, Qualcomm, Oracle founder Larry Ellison, and the Public Investment Fund of the Kingdom of Saudi Arabia. In less than three years, the Vision Fund has supported about 90 start-ups with more than $ 75 billion.
In July 2019, SoftBank shocked tech investors again when they announced plans to create a $ 2 billion Vision Fund to invest in artificial intelligence (AI). The SoftBank Group pledged $ 38 billion to Vision Fund 2, while Apple, Microsoft and Foxconn will all be touted as external employees who would allocate the extra billion.
Vision Fund 2 is underway, but only with the $ 38 billion from the SoftBank Group. External investors decided to put their contributions on hold as they waited to see how the early Vision Fund investments turned out.
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