Softbank confirms talks to offload Arm as it posts rebound profit

Might float chip-designer, sell it all or sell chunks. Whatever happens, server CPU sales are the upside

SoftBank has bounced back from a historic loss to post profits of $12bn as the company confirms that it is in negotiations to sell British chip designer Arm.

For its second quarter, SoftBank reported [PDF] a net profit of ¥1.25trn ($12bn), largely thanks to one-off sales of its stakes in US telco T-Mobile and Chinese e-commerce giant Alibaba.

The firm's vaunted "Vision Fund", which takes stakes in high-profile outfits like Uber and Slack, posted $2.8bn in profits. The fund also benefited from strong IPOs for member companies such as online home insurer Lemonade and Chinese property technology company Beike.

The results will come as a relief to investors after SoftBank posted its worst annual result in the firm's history last quarter, a net loss of $7.4bn. The loss saw CEO Masayoshi Son embark on an asset sale spree to raise $41bn and use the loot to fund share buybacks and reduce debt.

In the intervening months, SoftBank has raised 95 per cent of the promised amount, but Son said the business was still in “crisis mode” and that the company would remain on the defence for some time.

Masa-san also confirmed reports that the company is in negotiations to sell Arm, but said any deal would likely be more complex than a straightforward sale. He declined to say which companies are currently at the table.

"The basic idea is not selling the whole in cash,” he said in an earnings call. “We are considering multiple options.”

“Going public is one of the options. Partial sales is one of the options. Selling in whole or whatever it is, that's one of the options as well.”

Son said an Arm IPO before 2023, when it was originally planned, was also on the table. But he reiterated that he does not expect the British chip designer’s sales to reach their potential until its next generation of 5G chips are fully taken up around that time.

He also signalled that Arm-powered hyperscaler-designed server chips using, such as Amazon’s Graviton2, would become more important. "So both in terms of defence and offence, we have different options with Arm,” he said.

The company also said it would set up a new $555m fund using part of Son’s own wealth to invest in Amazon, Apple, Facebook and other established tech giants. ®