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SoftBank’s bet on Uber is paying off. Nvidia is another story

Posted at 2:02 AM, Feb 06, 2019
and last updated 2019-02-06 05:42:10-05

Some of SoftBank CEO Masa Son’s big bets on tech companies are paying off for the company’s bottom line.

Operating profit for the final quarter of 2018 jumped 60% from a year earlier to 438 billion yen ($4 billion), SoftBank said Wednesday.

A big chunk of that came from a surge in income from the Japanese company’s huge tech fund, which benefited from the rising value of investments in Uber and WeWork. But it took a billion-dollar hit from its stake in US chipmaker Nvidia and has since dumped the shares.

Son is a billionaire entrepreneur who started SoftBank as a software distributor in Japan nearly 40 years ago and built it into one of the biggest players in the global tech industry. In 2017, he launched the Saudi-backed SoftBank Vision Fund, which has pumped more than $45 billion into tech companies around the world and has more than $50 billion still to spend.

The Vision Fund’s aggressive moves — it has now invested in more than 70 companies — have shaken up the tech industry and made Son into one of its kingmakers.

While some of the fund’s high-profile investments have boosted SoftBank’s profits, at least one has hurt them.

The company said Wednesday that a sharp drop in the value of Nvidia, whose shares plunged toward the end of 2018, cost it 117 billion yen ($1.1 billion) in the last three months of the year — even after accounting for steps SoftBank took to hedge the risk.

Son said the Vision Fund offloaded its entire stake in Nvidia last month so it could concentrate on investing in promising “unicorns,” a term for tech startups that are worth at least a billion dollars.

One mega-IPO, more to come?

SoftBank’s listing of its Japanese mobile unit in a $23.5 billion IPO at the end of last year has brought in a heap of extra cash and moved Son closer to his goal of focusing his time on tech investing.

“SoftBank Group is an investment vehicle, not an operating company,” he said Wednesday.

The company announced it will spend some of the extra cash buying back as much as 600 billion yen ($5.5 billion) of its own shares.

More windfalls could be on the way. Uber and Slack, two of the most valuable startups in the Vision Fund’s portfolio, are both expected to list their shares on stock exchanges this year.

Son had boasted in the past about forming another Vision Fund as early as this year. But Saudi Arabia, which provided almost half the cash for the first fund, has been widely criticized over the killing of a prominent journalist in October, making it a controversial partner for future projects.

Son said on Wednesday that while SoftBank maintains a good relationship with the Saudi government, it’s too early to discuss how or when the next Vision Fund will come together.