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SoftBank profit wiped out by Vision Fund losses, second fund scaled back

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Quarterly profit at SoftBank Group Corp was almost wiped out as the Japanese technology giant was hit for a second straight quarter by losses at its US$100 billion Vision Fund.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

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TOKYO: Quarterly profit at SoftBank Group Corp was almost wiped out as the Japanese technology giant was hit for a second straight quarter by losses at its US$100 billion Vision Fund.

Wednesday's dismal results could further dampen investor enthusiasm for founder Masayoshi Son's big bets on untested start-ups. While Son told a news conference SoftBank had turned a corner, he also said he has been forced to scale back a second Vision Fund while investing with only SoftBank's own capital.

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That marks a major climbdown from July, when SoftBank said it had attracted US$108 billion in pledges for a second mega-fund.

More pointedly, it shows how the bailout of start-up WeWork last year and other missteps have put a chill on the tech investing scene and given SoftBank shareholder Elliott ammunition to lobby for change.

"We have caused a lot of concern," Son said in Tokyo following the results, adding he needs to "give everyone piece of mind" to secure outside funds for Vision Fund 2.

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Group profit was 2.6 billion yen (US$24 million) in the October-December quarter versus 438 billion yen a year before. The Vision Fund posted an operating loss of 225 billion yen (US$2.05 billion) for the quarter compared with a 176 billion yen profit in the same period a year earlier.

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But Son, known for an ebullience and charisma that is still rare in corporate Japan, said the company's performance was already improving.

"The tide is turning," he said.

BIG STAKE

Son pointed to a rally in prices at the Vision Fund's handful of listed investments and news overnight that a U.S. federal judge had rejected an antitrust challenge to the proposed merger of SoftBank's Sprint Corp and T-Mobile US Inc.

Shares of SoftBank finished up 12per cent in Tokyo before the results and after the U.S. court decision.

Son has long argued SoftBank's shares are undervalued, a position shared by U.S. hedge fund Elliott Management, which has recently emerged as a prominent shareholder. Elliott, one of the world's best known activist investors, is pushing for changes including US$20 billion in stock buybacks, sources said last week.

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