By Phred Dvorak
TOKYO -- Technology investor SoftBank Group Corp. recorded a profit of nearly $12 billion in the April-June quarter as gains from disposing former unit Sprint Corp. helped it bounce back from the worst year in its history.
Improved performance at SoftBank's $100 billion Vision Fund, the world's largest tech-investment pool, also drove the turnaround after write-downs there pushed SoftBank to a loss of $9 billion in the year ended March 31.
The company said it posted an investment gain of Yen296.6 billion ($2.8 billion) at the Vision Fund in the latest quarter. That gain -- recorded largely on the back of a global rally in tech stocks -- is the first since the same quarter a year ago, and it pushes the fund narrowly into the black.
"It's a bit too soon to say right now that the Vision Fund will be completely in the black from now on," said SoftBank Chief Executive Masayoshi Son. "Still, compared to when things were worst, the fund is steadily improving."
Mr. Son kicked off an online news conference with a photo of samurai warriors shooting guns under the headline "Defense."
SoftBank has lifted its share price and bolstered its balance sheet this year after taking a pummeling from investment missteps and the coronavirus pandemic.
Tuesday's results suggested its comeback plan is working for now -- but at a big price. SoftBank has scaled back its investing ambitions and put big chunks of some of its most valuable assets on the block. Its aim is to fund some $47 billion in stock and debt buybacks as well as hold extra cash.
Among those assets are stakes in Chinese e-commerce giant Alibaba Group Holding Ltd., Japanese mobile-phone unit SoftBank Corp. and T-Mobile US Inc. SoftBank said Tuesday it had sold or monetized Yen4.3 trillion ($41 billion) of those assets as of Aug. 3.
Sprint, which had been controlled by SoftBank, was taken over by T-Mobile on April 1. SoftBank received shares in the merged company but has now sold about two-thirds of them.
Gains from that sale, along with a gain relating to loss of control of Sprint, accounted for a big chunk of the group's net profit of Yen1.26 trillion.
Yet much of the money gained from T-Mobile and other share sales is already earmarked for repurchases of SoftBank's stock and debt. It has so far executed about two-fifths of some $23 billion in share buybacks proposed this year and more than $1.5 billion in debt redemptions.
SoftBank is also considering a sale of part or all of U.K. chip designer Arm, one of the company's biggest and most strategically important investments, Mr. Son said Tuesday, confirming a report in The Wall Street Journal. Mr. Son said another option was a public offering of Arm's shares in 2023 or earlier.
SoftBank bought Arm with great fanfare in 2016 for $32 billion, touting its lock on the market for cellphone chips and its potential as a designer of chips to power connected devices in the "Internet of Things." Now, Arm is spinning off the part of its business that offers IoT services in order to concentrate on chip design, and SoftBank is also considering a sale or listing of that, Mr. Son said.
At the heart of SoftBank's troubles were missteps at the Vision Fund, into which the company has been pouring money and resources for the past three years under the guidance of Mr. Son. The fund invested in tech startups that Mr. Son thought were poised for explosive growth. But some high-profile bets -- such as U.S. office-share company WeWork -- started to sour last year, leading to billions of dollars in write-downs.
The start of the coronavirus pandemic this year added to the company's woes, pummeling many of the Vision Fund's startups further and pushing SoftBank's share price to a low of Yen2,687 in mid-March. The company drastically shrank plans for a second multibillion-dollar Vision Fund.
Since then, a rise in equity markets has lifted returns at the nine listed companies in the Vision Fund's portfolio, although the largest, U.S. ride-hailing giant Uber Technologies Inc., is still trading at less than what the fund paid for it. Those gains as well as money the fund made from the sale of stakes in some of those companies pushed the Vision Fund back into the black as of Aug. 10, with a gain of around $3.6 billion over the life of the fund so far.
Mr. Son said five or six other portfolio companies were preparing to go public.
Vision Fund 2, which SoftBank is currently funding on its own after an unsuccessful attempt last year to get money from outside investors, has invested in around 10 companies so far with more prospects in the pipeline, Mr. Son said. "Our basic strategy hasn't changed," he said.
Yet he also unveiled a new investment unit that he said would invest in highly liquid publicly listed tech stocks -- a departure for SoftBank, which has largely made riskier bets that could win big if they are successful.
Mr. Son named Apple Inc. or Facebook Inc. as the kind of companies this investment unit might look at. It will manage $555 million, two-thirds contributed by SoftBank and a third by Mr. Son himself, and will be partly funded by cash from SoftBank's asset sales that it hasn't yet spent to buy back debt or shares.
SoftBank's own shares have more than doubled from their low of the year. On the Tokyo Stock Exchange, SoftBank shares closed Tuesday down 2.5% at Yen6,361.
--Kosaku Narioka contributed to this article.
Write to Phred Dvorak at firstname.lastname@example.org