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SoftBank’s quarterly turnaround: Profits surge as focus shifts to Arm unit

Investors are increasingly interested in the prospects of Arm Holdings, SoftBank's subsidiary and a British chip designer

SoftBank Group, a technology investor, announced that it had returned to net profit in the final quarter of its financial year. The Japanese company’s focus on artificial intelligence is helping it to fuel a return to growth.

SoftBank earned a profit of 328.9 billion yen ($2.11 billion) in January-March, compared to a loss of 32 billion yen in the same period last year. However, despite two consecutive quarters of profit, the company remained in the red for the full year.

Investors are increasingly interested in the prospects of Arm Holdings, SoftBank’s subsidiary and a British chip designer. Arm’s future is seen as crucial to SoftBank’s push into AI.

SoftBank has recently announced that their group assets are focused on artificial intelligence (AI) and that Arm, a company they acquired, will power technology companies throughout the Japanese firm’s portfolio.

However, Arm’s soaring valuation has not directly contributed to SoftBank’s profit as Arm is a subsidiary. While Arm reported record sales in the January-March quarter, SoftBank recorded a 33-billion-yen loss from its Arm investment in the last fiscal year due to increased expenses related to stock compensation and hiring.

In the year ended March, Arm’s headcount grew by over 1,100 with more than 80% of new hires being engineers.

SoftBank’s Vision Fund unit suffered a valuation loss in the fourth quarter, resulting in a loss of 57.5 billion yen. However, South Korean e-commerce firm Coupang generated around $600 million in unrealised investment gain, which was a bright spot for SoftBank.

In February, SoftBank’s Chief Financial Officer, Yoshimitsu Goto, stated that the company was returning to a “growth trajectory” despite its history of volatile earnings and outsized bets on startups.

Compared with the same period a year earlier when capital raised using its Alibaba Group stake cushioned writedowns in the value of Vision Fund private portfolio firms, SoftBank’s fourth-quarter net profit improved significantly, recording a profit instead of a loss of 32 billion yen.

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