Thursday, May 08, 2008

Softbank profit doubles in 4Q despite mobile expansion costs

By Associated Press

Softbank Corp.'s profit more than doubled in its fiscal fourth quarter despite the high costs of a marketing blitz that helped lure a record number of new mobile phone subscribers.

The technology and Internet company, which operates Japan's third largest mobile carrier, said Thursday that a deferred tax credit softened the impact of a 13 percent drop in group operating profit to 64.1 billion yen ($614.2 million) for the January-March quarter.

As a result, it booked a profit of 15.4 billion yen ($147.9 million), up from 6.9 billion yen a year earlier, on sales of 717.4 billion yen ($6.85 billion).

Softbank President Masayoshi Son said the quarter's performance reflected the company's aggressive push to gain users in March, ahead of a new school and fiscal year in Japan in April.

''A year earlier, we didn't realize how important March was,'' said Son, who founded the company in 1981. ''We regretted it.''

The company said it added 530,000 subscribers in March, outpacing rivals NTT DoCoMo Inc. and KDDI Corp. for the 11th straight month. Over the past year, it has gained 2.68 million subscribers, increasing its market share to 18.1 percent.

When Softbank bought its mobile operations for 1.75 trillion yen in 2006, the unit had been struggling under former owner Vodafone Group PLC. Analysts criticized the company for taking on debt to fund the purchase.

But the move appears to be paying off, with Softbank's fast-growing mobile business accounting for 59 percent of its 2.78 trillion yen in revenue in the fiscal year ended March 31. Its group net profit for the year nearly quadrupled to a record high of 108.62 billion yen ($1.0 billion).

Part of the earnings growth stemmed from a one-time gain of 57.2 billion yen ($550 million) for the listing of affiliate Alibaba.com Ltd. in Hong Kong.

The company did not release an earnings forecast for the current fiscal year.

Despite the focus on its mobile operations, Son stressed in a briefing that Softbank is first and foremost an Internet company.

Its various holdings include stakes in Yahoo Japan Corp., My Space Japan K.K., Chinese e-commerce giant Alibaba, as well as a professional baseball team.

''It was not our aim for Softbank to be the No. 3 mobile company (in Japan),'' Son said. ''From the beginning, it was to become Asia's No. 1 Internet company and the world's No. 1 mobile Internet company.''

Softbank reported earnings after the market closed. Before that, its shares fell 3.3 percent to 2,040 yen ($19.55) on the Tokyo Stock Exchange in a broad market decline.