By Anton Bridge
TOKYO (Reuters) -Japanese technology investor SoftBank (TYO:9984) Group said on Wednesday it plans to buy back a hefty $3.4 billion of its shares, an action called for by shareholders including Elliott Management to bolster its stock price.
The logic for Masayoshi Son's tech behemoth to purchase its own shares has grown as its market capitalisation is far less than the value of its portfolio assets. The impetus comes at a time when SoftBank has been seeking to take a bigger role in artificial intelligence - albeit with a much more cautious investment stance than in the past after a period of rebuilding its finances.
It unveiled a plan to buy back up to 6.8% of shares over the next 12 months, taking some of the sting out of an unexpected net loss for April-June.
That said, the plan falls short of calls for a bigger buyback programme and is just a fraction of SoftBank's 2.5 trillion yen ($17 billion) buyback announced in 2020, its biggest ever.
Elliott has pressed SoftBank for a $15 billion buyback programme, a person familiar with the matter said in June. The activist U.S. fund founded by investor Paul Singer, which successfully lobbied for the 2020 buyback, has rebuilt a position in SoftBank worth more than $2 billion, the person added.
Chief Financial Officer Yoshimitsu Goto told reporters the board decided to proceed with a new share buyback after much discussion, judging it to be in the interests of the company.
"It's certainly possible that we may decide on another share buyback programme at some point in the future. Shareholder return is always a main theme of discussion among the board of directors," he said.
Goto said external pressure did not play a part in the buyback, adding "SoftBank is not the kind of company to make decisions based on the influence of an individual party."
SoftBank's first-quarter loss of 174.3 billion yen was roughly a third of the loss logged in the same period a year earlier but far short of an LSEG consensus estimate for 104.7 billion yen profit. The figures are based on reported net income attributable to shareholders and reflected a hit from higher taxes.
On a separate measure, net income, it swung to a modest profit of 10.5 billion yen for the period. Its Vision Fund investment unit booked an investment gain of 1.9 billion yen after an investment loss of 58 billion yen in the previous quarter.
SoftBank, which had $31 billion of cash on hand as of end-June, has been rebuilding its finances after the failure of high-flying office-sharing startup WeWork and after some of its tech firms it is invested in through its Vision Funds fell out of favour among investors.
Goto said SoftBank is investing with the advent of what it called an age of artificial superintelligence in mind. Recent acquisitions include Graphcore, a British artificial intelligence chipmaker, for an undisclosed sum. It counts its 90% stake in chip designer Arm Holdings (NASDAQ:ARM) as its crown jewel asset.
The results come amid much market turmoil, particularly for large-cap Japanese stocks and major tech companies which have been hurt by a massive unwinding of yen carry trades and U.S. recession fears.
SoftBank's shares slumped almost 20% on Monday but have since recovered. They finished up 5.2% on Wednesday before the results.
($1 = 147.0100 yen)