Softbank Corp has reported consolidated group net income of 37.54bn yen ($302m) for the year ended March 21, more than three times its 10.3bn yen ($82.9m) profit in the prior year. But the solid financial performance was boosted mostly by stock sales – mainly those of internet portal Yahoo! Inc, in which the Japanese investment, software and publishing giant holds a 28% stake.
Softbank’s publishing business, which includes US subsidiary Ziff-Davis Inc, has fallen on hard times and would have led Softbank into the red for the year, save for its investment gains. Pre-tax operating loss was 15.45bn yen, ($124.3m) down from a pre-tax profit of 24.27bn ($195.3m) yen last year. The loss was fueled by Ziff’s poor performance and related restructuring costs, as well as aggressive investments in new businesses.
The company sold three million Yahoo shares in February, raising $410m and booking roughly $390m of that as pure profit. It still holds a stake in the company worth about $8.8bn, based on current prices. It also hold a 22% stake in Yahoo-acquires GeoCities Inc and a 27% stake in E*Trade Group Inc – two investments alone worth roughly $4.25bn. Stakes in web retailer Buy.com Inc and E- Loan Inc are also part of the Softbank investment portfolio.
Softbank plans to reorganize as a holding company, for tax reasons, effective October 1. That means the parent company will cease making any sales and will make its existing software and networking operations into a subsidiary. Going forward, the company’s earnings will come from dividends, interest payments and royalties paid to it by the subsidiaries – as well as stock sales. The company says its early-stage investments in a variety of technology companies should provide it with growing profits in the years ahead.
