SoftBank seen booking 75% first-quarter profit drop as it returns to profitability

By Sam Nussey

TOKYO (Reuters) - SoftBank Group Corp (T:9984) is seen booking a 75% first-quarter profit plunge on Tuesday, albeit making a return to profitability, as the coronavirus outbreak continued to weigh on the tech bets of CEO Masayoshi Son's $100 billion Vision Fund.

The Japanese conglomerate is expected to record operating profit of 171 billion yen ($1.62 billion) for April-June, showed the average of three analyst estimates compiled by Refinitiv. That would compare with 625 billion yen in the same period a year earlier.

Analysts grapple with uncertainty over how the Vision Fund values its portfolio of mostly unlisted technology firms. Faltering bets on startups such as shared office space firm WeWork pushed SoftBank to its deepest annual loss last year.

GRAPHIC: SoftBank and the Vision Fund https://tmsnrt.rs/31jaoIQ

The performance of the Vision Fund's public assets is likely to return SoftBank to profit in the first quarter, said analyst Kirk Boodry at Redex Research. Positive news include insurance startup Lemonade Inc 's (N:LMND) successful July listing.

Chief Executive Son has pivoted as plans faltered, jettisoning satellite operator OneWeb and launching a share buy-back funded by asset sales to support SoftBank's share price.

The group has sold down stakes in e-commerce firm Alibaba Group Holding Ltd (N:BABA) and wireless carriers SoftBank Corp (T:9434) and T-Mobile US Inc (O:TMUS).

It is also looking at selling chip designer Arm, media reported, in a possible break from a firm Son praised as closely aligned with his vision but that has turned money losing under his watch.

SoftBank has struggled to attract capital for a second mega-fund given poor performance of the first and so has been investing its own money.

"With the amount of assets that have been sold, the next logical step is to move forward on Vision Fund 2," Boodry said.

The value of SoftBank's assets has returned to pre-coronavirus levels, Son said in June, referring to his preferred measure of success.