By Megumi Fujikawa and Kosaku Narioka
TOKYO -- SoftBank Group said its net asset value surged thanks to its U.K. chip-design unit, Arm, and that it has committed to five investments in artificial intelligence on the scale of $1 billion each.
SoftBank's quarterly briefing Monday showed its transition to an AI focus, the latest makeover for a company that previously was centered on telecommunications and at one point had much of its value tied up in Chinese internet company Alibaba.
Now it has shed its Alibaba stake and Arm accounts for nearly half of the group's assets. Although it has lost money in each of the past three years, SoftBank said its net total assets reached $183.6 billion as of March 31, up $48 billion from three months earlier, after investors piled into Arm's stock.
The stock was listed in the U.S. last September but SoftBank retains a 90% stake in the unit, whose designs are widely used in smartphone chips and increasingly in AI applications.
SoftBank is betting on growth in AI after a difficult period. The Japanese technology investment company said it booked a net loss of nearly 228 billion yen, equivalent to nearly $1.5 billion, in the fiscal year ended March 31, compared with analysts' forecasts of a slight profit. That followed losses of Yen970 billion and Yen1.7 trillion in the two previous fiscal years.
"It was a year in which we were able to go on the offensive, while still playing defense," said SoftBank's chief financial officer, Yoshimitsu Goto.
The company had held back from making new investments as its flagship Vision Fund investment vehicles suffered huge losses amid the pandemic and high interest rates. More recently it has resumed an active search for opportunities.
SoftBank and its related funds invested $3.9 billion in the year ended March 31 and it said it has committed to invest in five additional companies, with each investment around $1 billion. The new deals include GreenBox, a joint venture that offers AI-powered automated warehouse services.
Last week, Arm posted a sharp increase in net profit for the three months ended March as revenue jumped partly because of higher demand for chips related to AI and data centers.
SoftBank's Vision Fund business edged into the black in the most recent fiscal year after losing tens of billions of dollars the previous year. Tech stocks surged for much of the year on enthusiasm over AI and the prospects of potential Federal Reserve rate cuts later this year.
Goto, the CFO, said SoftBank wanted Arm and the other companies in which it is investing to create a new ecosystem for AI. He said SoftBank's chief executive, Masayoshi Son, was continuing to take a break from quarterly earnings meetings so he could focus on AI but would likely appear at the company's annual shareholder meeting in June.
In a speech last October, Son said artificial general intelligence would become overwhelmingly more powerful than all of human intelligence over the next decade. "Take advantage of it or be left behind," he said.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com and Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
May 13, 2024 07:39 ET (11:39 GMT)
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