TOKYO (AFP) – Japan’s SoftBank Group yesterday posted a net profit in the second quarter (Q2), partly thanks to gains from its recent reduction of its stake in Chinese e-commerce giant Alibaba.
The investment behemoth has made huge bets to find and grow new tech ventures around the world – making its earnings vulnerable to fickle market forces, and leading to dizzying highs and lows in recent years.
China’s crackdown on its tech sector has also hit SoftBank hard, because the Japanese group has long been a major shareholder in Alibaba and others such as ride-hailing giant Didi Chuxing.
In August, SoftBank announced it would sell down some of its shares in Alibaba, reducing its stake in the Chinese tech giant to around 15 per cent from 24 per cent.
This helped boost SoftBank’s earnings in the Q2 for a net profit of USD21.4 billion.
“The company’s voting ownership in Alibaba fell below 20 per cent, and Alibaba was therefore excluded from the associates of the company,” SoftBank Group noted in a statement.
Over the first half of this financial year, however, it suffered a net loss of JPY129 billion, brought down by its record net loss in the first quarter. SoftBank’s net loss in April to June was partly due to a global tech share rout triggered by interest-rate hikes by the United States (US) Federal Reserve (Fed) and other central banks to tackle inflation.
These market losses caused painful drops in SoftBank’s investments in unicorn ventures, such as US food delivery app DoorDash and South Korean e-commerce brand Coupang, a broad trend that continued in the Q2, SoftBank said.
Chief executive officer Masayoshi Son is known for his unconventional and often sanguine presentations at earnings announcements to highlight his vision and philosophy behind his decisions, such as investing generously in risky ventures like the troubled WeWork.