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TOKYO — SoftBank announced on Tuesday that it had edged back into profitability, while also confirming that it will seek to take public one of its prize holdings, the chip designer Arm, after the collapse of a hoped-for sale to Nvidia, the Silicon Valley semiconductor manufacturer.
The deal, initially valued at $40 billion, which would have been the largest in the industry’s history, fell apart in the face of opposition from regulators, delivering a major blow to the Japanese conglomerate.
SoftBank, which operates the world’s biggest tech investment fund, has suffered a setback in recent months as the values of its investments, which are heavily weighted to online services like food delivery and ride hailing, have plunged from their pandemic highs.
Many of those stocks recorded huge gains in the first half of last year as investors took advantage of cheap money to pile into companies that benefited from the extra time people were spending in their homes.
Those gains have largely reversed, however, amid concerns about the potential for rising interest rates and pressure from the Chinese government on its domestic tech sector.
Despite those headwinds, SoftBank eked out $251 million in profit in the three months that ended Dec. 31, a drop of more than 97 percent from a year earlier. The company recorded a loss of $3.5 billion in the previous quarter.
The pandemic has made plain the gamble inherent in the company’s strategy as it has shifted from a focus on running telecoms to investing in some of the world’s biggest tech companies, sometimes based on little more than the whims and intuitions of the company’s founder, Masayoshi Son.
In the fiscal year that ended in March 2020, SoftBank reported an annual loss of $12.7 billion — reportedly the largest in Japan’s corporate history — as the company struggled with the collapse of WeWork’s initial public offering and the disruptions of the early months of the spread of the coronavirus.
A year later, it reported its largest-ever annual profit: $46 billion, fueled by surging tech prices and a hot I.P.O. market that sent the company’s investments in companies like DoorDash and the South Korean e-commerce giant Coupang soaring.
Today, SoftBank faces its toughest challenge from the collapse in the share prices of its Chinese investments, especially the online marketplace Alibaba, whose value has plummeted as investors worry about increased scrutiny from Chinese regulators.
Alibaba, which accounted for around 24 percent of SoftBank’s assets in December, has shed more than 60 percent of its value since its high in October 2020.
On Tuesday, Mr. Son said SoftBank’s previous quarterly earnings were announced when the company was in the middle of a storm, with some of its most valuable assets taking on water. The most recent results, he said, show that “the storm has not ended; the storm has gotten stronger.”
“Last year’s performance was maybe too good for us, and now we’re seeing a downward trend,” he added.
SoftBank’s problems appear likely to get worse as it heads into the last quarter of its fiscal year, which ends in March. Tech stocks have continued to decline, and the company has lost one of its top executives in a pay dispute.
The company’s public offerings “have done poorly for the most part” for investors, Atul Goyal, an equities analyst at Jefferies, wrote in a research note, adding that SoftBank “has rarely ever” sold its stakes.
A nearly $9 billion stock buyback, announced in November, has failed to generate much excitement among investors.
The difficulties have been reflected in SoftBank’s share price, which reached a high of 10,635 yen ($92) last spring and has since retreated by around 50 percent, closing at ¥5,302 on Tuesday.
Now, the company will need to figure out what to do with Arm.
In his remarks Tuesday, Mr. Son downplayed the collapse of the Nvidia deal, saying that taking the company public would most likely “be the better scenario.”
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