After posting a record ¥1.36 trillion loss for the year to March 30, SoftBank Group has returned to profitability for the first quarter of its 2020 fiscal year to June 30.
Net sales for the Japanese giant decreased 2% to ¥1.45 trillion, around $13.5 billion, while net income increased 12% to ¥1.25 trillion yen.
The net income figure consisted of ¥260 billion from Japanese telco SoftBank Corporation, ¥130 billion from the SoftBank Vision Fund, ¥422 billion as a result of selling T-Mobile shares, and ¥736 billion gained from the merger of T-Mobile and Sprint in April. Offsetting this was around ¥50 billion in derivative losses, and ¥253 billion in income tax.
In March, the company said it would spend ¥4.5 trillion on buying back shares and reducing debt, funded by selling the equivalent amount of assets. To August 3, SoftBank has monetised ¥4.3 trillion of its assets. The company said on Tuesday that while it had intended to complete the buy backs by the end of March, uncertainly in the market has meant its plans might be extended beyond that date.
"Given the current concern for a second or third wave of the novel coronavirus (COVID-19), [SoftBank Group] believes that it needs to further enhance its cash reserves," it said.
Looking at the group's segments, the investment business of holding companies -- that contains SoftBank Group Capital and has a portfolio including Alibaba, T-Mobile, and part of WeWork that isn't in the SoftBank Vision Fund -- reported a ¥650 billion gain on its investments and ¥459 billion profit before income tax.
For the SoftBank Vision Fund, it reported a ¥297 billion gain on its investments for the first quarter and reported pre-tax profit of ¥130 billion.
As of the end of June, the fund has investments sitting in 86 companies, with $75 billion worth of investment ploughed into its portfolio for a fair value of $71.5 billion, resulting in it being down for an unrealised loss of $3.7 billion. The vast majority of that unrealised loss is from 78 unlisted companies that make up $4.8 billion, while Uber is contributing around $800 million of the unrealised loss, after the fund invested $7.7 billion in the ride-hailing service for a fair value of $6.9 billion.
During the first quarter, the fund recorded $1 billion in realised gain from exiting some of its investments.
Japanese telco SoftBank Corporation reported steady sales of ¥1.17 trillion and pre-tax income down 1% to ¥259 billion.
Sales picked up for Arm by 7.1% to ¥49 billion, while its loss widened by ¥2.2 billion to ¥13 billion. Breaking down its revenue in US dollars, $282 million is from technology royalty payments, and $122 million is from technology licensing.
"Technology royalty revenue increased 17.5% ... led by an increase in shipments of 5G related smartphones and networking equipment. Technology licensing revenue decreased only 2.4% ... despite the increased uncertainty around the semiconductor industry from the impact of COVID-19," the company said.
The increasing loss for Arm was pinned on increasing its headcount by 744 persons to 6,808 at the end of the quarter.
In June, the Arm-powered supercomputer, Fugaku, took out top place on the TOP500 supercomputer list.
It was reported last month that Nvidia is in advanced talks to pick up Arm at a valuation in excess of $32 billion.
Earlier in July, Arm announced it was spinning out its two Internet of Things services businesses into new entities that are owned and operated by SoftBank. The move is expected to close in September.
Shedding its two IoT Services Group businesses would let Arm focus more on its core semiconductor IP business.
It is part of a bigger ¥1 trillion pool of non-operating losses that SoftBank experienced from investments held outside of its Vision Fund.
It earned ¥4.86 trillion in revenue for the fiscal year ended 31 March 2020.
The company is in need of funds to support a stock buyback scheme.