By Makiko Yamazaki
TOKYO (Reuters) – Japan’s SoftBank Group Corp <9984.T> on Thursday flagged a sharp recovery for struggling U.S. unit Sprint
The telecoms and internet conglomerate unveiled plans this month to purchase ARM for $32 billion in cash, one of CEO Masayoshi Son’s boldest bets yet, as he seeks to be at the forefront of the next wave of digital innovation.
“I’m telling ARM management – let’s increase the number of engineers, boost R&D spending and make investments proactively,” Son told a briefing on SoftBank’s first-quarter earnings where it reported flat profits.
ARM provides the technology in nearly all smartphones including Apple’s
He added that ARM and Sprint would dominate his time.
“I used to spend half of my time on Sprint and the remaining time on the rest of the company. From now on, I plan to spend 45 percent of my time on Sprint and another 45 percent on ARM.”
For the April-June first quarter, operating profit increased 0.2 percent to 319.2 billion yen ($3 billion) as wider losses at Sprint were offset by solid earnings for its domestic telecommunications business.
SoftBank did not provide annual earnings forecasts. Analysts’ forecasts since news of the ARM acquisition call for SoftBank to post annual operating profit of around 1 trillion yen, almost unchanged from a year earlier.
While Sprint posted wider losses in quarterly earnings this week, it also posted a big increase in postpaid phone subscribers and said it expected to be cash flow positive in the next financial year.
“Sprint has been a drag, but I’m now seeing signs of a V-shaped recovery,” said Son. He has said he went ahead with the ARM deal because he believed he was close to turning around Sprint.
Before the deal on July 18, SoftBank raised nearly 2 trillion yen in cash in just a few months through asset disposals including the sale of shares in China’s Alibaba
But investors had expected SoftBank to use the funds to pay down debt or give shareholders a windfall by buying back its own shares, and the ARM acquisition has raised concerns that SoftBank is trying to do too much.
SoftBank had interest-bearing debt of 11.7 trillion yen ($112 billion) as of end-June.
Asked whether Yahoo Inc’s
(Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)