What's going on?
Japanese technology conglomerate SoftBank Group – which owns the world’s largest technology investment fund, Vision Fund – reported a 49% increase in its profit for the second quarter on Monday.
What does this mean?
SoftBank’s tidy profit was boosted by Vision Fund’s sale of its Indian online retailer, Flipkart – to US retail giant and owner of many a kart, Walmart. Vision Fund’s still pretty new – this is its first major divestment (the opposite of investment, typically when a company sells an asset for cash) and it went pretty well, by all accounts. SoftBank as a whole’s profit for the quarter was $6.4 billion, of which $2.2 billion came from Vision Fund. The fund made a 60% return on its sale of Flipkart, which it bought and sold within a year.
Why should I care?
For markets: A SoftBank initial public offering (IPO) commeth.
SoftBank is increasingly shifting away from its investments in telecoms, where it provides mobile, internet, and fixed line services (does anybody still have a fixed line these days?!). The firm is planning to publicly list its Japanese telecoms unit – which’ll come under pressure soon from competitor Rakuten’s imminent launch of its own wireless services. SoftBank’s second quarter telecom earnings rose less than 1%, so it doesn’t exactly have a lot of wiggle room in the sector. The listing is slated to be one of Japan’s biggest-ever IPOs.
The bigger picture: The “Oracle of Omaha” continues to succeed.
Another huge investment company, Warren Buffett’s Berkshire Hathaway, also reported fresh second-quarter earnings – its profit rose 67%. The conglomerate beat expectations, citing the growing US economy as well as its insurance underwriting businesses (like GEICO). One of Berkshire’s biggest stock holdings is, fittingly, America’s first trillion-dollar company – Apple. It seems that a rising tide does, indeed, lift all boats.