[ad_1]
TOKYO – Like the genius of Disney's "Aladdin" films, Alibaba Group Holding fulfills the wishes of the SoftBank Group.
SoftBank expects to achieve a consolidated pre-tax profit of 1.2 trillion yen ($ 11.1 billion) for the period from April to June on proceeds from the sale of Alibaba shares and gains on financial derivatives. This represents about 70% of pre-tax profit for the year to March, about 1.7 trillion yen.
Alibaba's product represents 460 billion yen and gains derived from 740 billion yen. SoftBank initiated complex financial transactions in 2016 which allowed it to add these amounts to its pre-tax profit.
The portion of the derivative gains largely eliminates the losses on derivatives recorded by SoftBank in the past.
Masayoshi Son, chairman and CEO of the SoftBank Group, said that he "does not monitor the profits that appear in the books" when he runs the company. But the impact of the sale of Alibaba shares was not small. In fact, they helped SoftBank beat Toyota Motor as the main source of revenue for Japan.
Looking at 1,200 billion yen in profit alone could downplay Alibaba's total contribution. More importantly, SoftBank's holdings in the Chinese internet giant enable SoftBank to obtain significant capital.
In 2016, SoftBank raised $ 10 billion by selling part of its stake in Alibaba and taking other measures. Of this amount, $ 3.4 billion was obtained by directly selling shares to Alibaba and investment funds; the rest was obtained through financial derivatives.
SoftBank raised 842.3 billion yen in March 2018 and 161 billion yen in the following 12 months, taking advantage of its holdings in Alibaba every year.
SoftBank was able to increase this figure thanks to the huge unrealized gains on its holdings in Alibaba. On the market capitalization of more than 48 trillion yen of Alibaba, the SoftBank group can claim 14 trillion yen.
All of this comes from an investment of 2 billion yen that Masayoshi Son made to Alibaba in 2000. The value of the bet on Jack Ma's startup.
SoftBank is expected to continue to build on its holdings in Alibaba. "I want to become the leader of the AI revolution," said Son at the general meeting of SoftBank shareholders in June. The president has added many of the world's leading artificial intelligence companies to SoftBank's investment portfolio, a strategy he will pursue and for which SoftBank's holdings in Alibaba will be critical.
SoftBank has not yet recovered what it has invested in other target companies, but some signs suggest that the SoftBank Vision Fund, which manages about $ 100 billion, could begin to recover. money in the near future. Slack Technologies, which operates a chat tool in the workplace, and Uber Technologies has recently been listed on the New York Stock Exchange. We, which operates the WeWork office-sharing company, and DoorDash, a food delivery service, plan to be listed in the near future.
SoftBank also plans to create a second Vision fund.
On the negative side, Sprint, a subsidiary of SoftBank, a US communications company in decline, is still struggling to seal a merger with its competitor T-Mobile US. Authorities in a number of US states have filed lawsuits to stop the merger. Meanwhile, Arm Holdings, a UK-based semi-conductor that SoftBank bought for 3.3 billion yen in 2016, is hardly ready to return SoftBank's investment.
SoftBank clearly supports Alibaba, which accounts for nearly half of the value of the 26 trillion yen held by SoftBank. His fate depends on the search for another Alibaba before his current genius ceases to fulfill his vows.
Source link
