SoftBank Group posts $251 mln third quarter profit; Arm deal collapses

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SoftBank Group Corp reported on Tuesday that it had squeezed out a net profit of 29 billion yen ($251 million) for the quarter from October to December, as tech portfolio valuations weaken at its Vision Fund unit.

The result compared with a profit of 1.17 trillion yen in the same period a year earlier, when SoftBank booked what was at the time a record quarterly result as its portfolio rallied.

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After tech unicorns plunged into the “valley of the coronavirus” in the early days of the COVID-19 pandemic, SoftBank CEO Masayoshi Son rode a recovery in valuations as startups such as e-commerce firm Coupang came to market.

Now valuations are again under pressure as investors cast a skeptical eye over tech firms promising future profits and central banks move towards paring pandemic stimulus.

The Vision Fund unit posted an investment gain of 111.45 billion yen during the quarter.

Many portfolio companies are trading below their listing price, with office-sharing firm WeWork, ridehailer Grab and used-car platform Auto1 all falling during the quarter.

The group’s exposure to China has also affected performance, as regulators take action against tech firms. Shares of e-commerce giant Alibaba, in which SoftBank has a stake, dropped a fifth in the three months to the end of December.

Such assets are used by the group for loans as it invests through its Vision Fund unit, which runs the $100 billion Vision Fund and a smaller second fund.

Vision Fund 2, which had $51 billion in committed capital at December-end, has invested $43.1 billion in more than 200 startups.

SoftBank said separately on Tuesday its deal to sell chip designer Arm to Nvidia had fallen through amid regulatory hurdles.

The earnings come at a watershed moment for the conglomerate as senior executives exit the firm, including Chief Operating Officer Marcelo Claure, who led the restructuring of WeWork and launched the group’s Latin American-focused fund.

Son, who three months ago said SoftBank was in a “blizzard,” will speak at a news conference at 4:30 p.m. local time (0730 GMT).

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