SoftBank unveils share buyback as losses narrow

7th Aug 2024 10:42

(Sharecast News) - Technology investing giant SoftBank Group reported a significant reduction in losses for its fiscal first quarter on Wednesday, alongside a bold plan to repurchase up to $3.4bn worth of its shares.

The Japanese company recorded a net loss of JPY 174.3bn (£0.93bn) for the quarter through June - a sharp improvement from the JPY 477.6bn loss in the same period last year.

Its financial rebound was driven by gains in key investments, including Alibaba and T-Mobile, as well as a narrower loss in its Vision Fund operations.

The company also swung to a net profit of JPY 10.5bn, thanks to a JPY 560bn gain from various investment activities, despite ongoing market volatility.

However, the Vision Fund, a crucial arm of SoftBank's tech investments, posted a JPT 204.3bn loss, offset by a JPY 1.9bn gain from its portfolio, particularly in companies like ByteDance, the owner of TikTok.

The company's recent financial performance also reflected a recovery in some of its troubled investments.

WeWork, the office-space-sharing company that filed for Chapter 11 bankruptcy protection in 2023, emerged from bankruptcy in June, contributing to an improved outlook.

However, the impact of a weakening yen, which added JPY 443.9bn in losses for the quarter, was posing challenges.

SoftBank's decision to initiate a substantial share buyback programme, valued at JPY 500bn, came on the back of growing pressure from shareholders, particularly US activist investor Elliott Management.

Elliott had pushed for a $15bn buyback to address the disparity between SoftBank's market capitalisation and the value of its underlying assets.

The buyback plan would represent up to 6.8% of SoftBank's outstanding shares.

At the close on Wednesday, shares in SoftBank Group were up 5.19% in Tokyo, at JPY 7,544.

Reporting by Josh White for Sharecast.com.