SoftBank Q3 seen under pressure from tech weakness, Arm IPO eyed

SoftBank Group Corp's quarterly earnings on Tuesday are set to show persistent pressure from tech valuations that have yet to recover from a global sell-off, adding to the uncertain outlook for the timing of the highly anticipated Arm listing.

The Japanese tech giant's planned listing of British chip designer Arm, one of the crown jewels of Masayoshi Son's sprawling conglomerate, is seen as crucial to improving SoftBank's financial performance and boosting shareholder returns.

SoftBank has said the initial public offering (IPO) is unlikely to take place during the current business year that ends in March due to market conditions. But it aims to take the company public by the end of calendar 2023.

"What's important is pressing ahead with Arm's IPO, carrying out exit plans for other investments, and then, through those steps, improving financial standing and delivering shareholder returns," SMBC Nikko Securities analyst Satoru Kikuchi said.

SoftBank is expected to post a net profit of 103.7 billion yen ($806.13 million) for the latest quarter, according to analysts' average estimate compiled by Refinitiv. That compares with a 29 billion yen profit a year earlier.

SoftBank reported a 3 trillion yen profit in July-September, although those results were boosted by the sale of some of its stake in Chinese tech giant Alibaba Group Holding and followed two straight quarters of losses.

SoftBank bought Arm, whose technology underpins the global smartphone industry and is used in supercomputers, for $32 billion in 2016.

It is pushing ahead with plans to list Arm following the collapse of a sale to Nvidia Corp in an IPO that could value the company at as much as $60 billion, Reuters has reported.

One notable change to SoftBank's quarterly announcement this time around is the lack of founder and chief executive Masayoshi Son's colourful presentation, which has been a regular feature of SoftBank's earnings disclosure.

Son said in November he would not be speaking at such briefings for the foreseeable future as he focuses on driving Arm's growth.

Investors will also be watching closely whether SoftBank announces a fresh share buyback scheme, along with the third quarter results.

On the day of its first quarter earnings announcement in August, SoftBank said it planned to buy back up to 400 billion yen worth of its own shares, but did not announce a new buyback plan at the time of its second quarter earnings in November, helping send its shares down 13% in the next trading day.

($1 = 128.5500 yen)

($1 = 128.6400 yen)