SoftBank Increases Quarterly Profit But Cuts Full-Year Forecast

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SoftBank CEO Masayoshi Son

Profits triple to $4.2 billion due to gain from Alibaba IPO; CEO Masayoshi Son said further Hollywood acquisitions were possible

Japanese Internet and telecoms giant SoftBank announced a quarterly profit of $4.2 billion (483 billion), up from $1.46 billion (165.8 billion) in the same period in 2013, but cut its full-year forecast due to the struggling performance of U.S. mobile carrier Sprint.

SoftBank logged a gain of $4.95 billion (563 billion) from the IPO of Chinese e-commerce giant Alibaba, in which it holds a stake of approximately 30 percent. However, due in part to increased losses at Sprint, SoftBank cut its full-year profit forecast by 10 percent to $7.92 billion.

Sprint, which is 80 percent owned by SoftBank, announced 2,000 job cuts on Monday as part of the restructuring plan being implemented by its Japanese parent company.

Since SoftBank took a $250 million stake in Legendary Pictures, the company has been on a spending spree in India, and more acquisitions and investments are almost certainly in the pipeline.

In answer to a question from The Hollywood Reporter about further acquisitions or investments in a U.S. studio following the breakdown of talks with DreamWorks Animation and taking a stake in Legendary, CEO Masayoshi Son said further deals were possible.

"It all depends; it's on a case by case basis. I'm not going to comment on individual cases. We are an Internet company, so that is our focus," said Son. "But we wouldn't rule out further acquisitions that have synergies with our business."

Read more Inside SoftBank's Studio Grab: Is a DreamWorks Deal Really Dead?

The current market valuation of SoftBank, at around $84 billion (9.5 trillion), is too low, Son believes.

"Berkshire Hathaway has a Buffett premium: the company's value plus a premium, because Warren Buffett is considered an investing god. But SoftBank's market capitalization has a Masa discount: SoftBank's value minus how much people worry that I may go on a shopping spree with my crazy ideas," he said.

"The value of our stakes in Alibaba and [Finnish mobile game company] Supercell alone are equal to the market capitalization of SoftBank," Son explained, saying he wants SoftBank to be a goose that keeps laying golden eggs, referencing the Aesop fable.

With Japan's domestic economy set to shrink in the coming decades alongside its population, Son emphasized that SoftBank will be continuing to look abroad for growth.

"In 35 years' time, the two top economies in the world will be China and India," he said, explaining his focus on investments in India and noting its young, English-speaking population.

Son identified Indonesia as a future fast-growth economy that SoftBank has already invested in via an e-tailing venture.

Nov. 4,  00.45 a.m. Updated with comments from Tokyo press conference.

Twitter: @GavinJBlair

 

 

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