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(Corrects to state that SoftBank has recorded an investment gain of $19.8 billion on OpenAI rather than anticipates one in paragraph 7)<\/p>\n
By Anton Bridge<\/p>\n
TOKYO, Feb 12 (Reuters) – Japan’s SoftBank Group booked a fourth consecutive quarterly \u200cprofit on Thursday, helped by the rising valuation of its OpenAI investment and took on more debt as \u200cit deepened its exposure to the red-hot artificial intelligence sector.<\/p>\n
SoftBank reported a net profit of 248.6 billion yen ($1.62 billion) in the October-December quarter, compared with \u200ba net loss of 369 billion yen over the same period the previous year.<\/p>\n
The technology and investing conglomerate’s earnings have been flattered by the rising valuation of its investment in ChatGPT-maker OpenAI, even as the market questions the risk of overexposure to a single firm.<\/p>\n
Five analysts surveyed by LSEG projected quarterly net income in a range between a gain of 1.1 trillion yen ($7.07 \u200cbillion) and a loss of 480 billion \u2060yen.<\/p>\n
Masayoshi Son’s conglomerate has now invested more than $30 billion in OpenAI, building a shareholding of around 11%, in an “all-in” wager it will emerge as a winner in the battle between competing developers \u2060of large language models.<\/p>\n
OpenAI is reportedly seeking another capital injection of $100 billion, with SoftBank joined by Amazon and Nvidia as prospective investors at a yet higher valuation of $830 billion.<\/p>\n
SoftBank said it recorded a total investment gain on its OpenAI investment of $19.8 billion at December-end.<\/p>\n
To \u200bfinance \u200bits bets, SoftBank has turned to asset sales, bond issuance and \u200bloans backed by its other holdings, such as \u200cchip designer Arm.<\/p>\n
RAISING FUNDS<\/p>\n
The heavy exposure to OpenAI means SoftBank is increasingly viewed as a publicly traded proxy for the U.S. firm, with investors examining the impact of its spending spree on its finances.<\/p>\n
The OpenAI stake is housed within the Vision Fund 2 investment vehicle, 17% of which is owned directly by SoftBank founder and CEO Son.<\/p>\n
SoftBank has already exited its position in Nvidia and, between June and December last year, sold part of its stake in T-Mobile for $12.7 billion.<\/p>\n
The conglomerate expanded \u200ca margin loan using shares in Arm to $20 billion from $13.5 billion \u200bpreviously and has used the remaining capacity.<\/p>\n
SoftBank also raised its borrowings against \u200bshares of its domestic telecoms unit SoftBank Corp to \u200b1.2 trillion yen from 800 billion yen.<\/p>\n
While OpenAI was once considered the dominant player among makers \u200cof large language models, it has been negotiating \u200brising costs to train and run \u200bits AI models amid intensifying competition from the likes of Alphabet.<\/p>\n<\/p><\/div>\n
OpenAI is laying the groundwork for an initial public offering in what could be one of the biggest listings ever, Reuters reported last year.<\/p>\n
SoftBank’s loan-to-value ratio, a \u200bmeasure of indebtedness, was 20.6% at December-end, \u200ccompared with 16.5% three months earlier. Its cash pile decreased to 3.8 trillion yen over the same \u200bperiod.<\/p>\n
SoftBank’s shares closed up 2.4% in a flat market before its earnings were released.<\/p>\n
($1 = 153.2500 yen)<\/p>\n
(Reporting by \u200bAnton Bridge; Writing by Sam Nussey; Editing by Jacqueline Wong)<\/p>\n<\/p><\/div>\n