Softbank Corp.’s share price down, posts a 68% decline in first-quarter profit as subscriber growth slows

SoftBank Corp., posted today a 68% drop in its first-quarter profit, after booking a 63 billion yen loss from its stake in Alibaba Group Holding Ltd. and as subscriber growth slowed over the period.

According to the announcement made by SoftBank Corp., the companys net income over the first three months ended June declined to 77.6 billion yen (763 million dollars) from 244. 4 billion yen over the same period a year ago. Last years first-quarter net income was boosted by a 150 billion-yen gain from consolidating GungHo Online Entertainment Inc.

The company also revealed that its operating profit fell by 15.6% and reached 337.63 billion yen, despite a 126% increase in the companys sales. Still, the company managed to surpass initial analysts projection of 302 billion yen.

A 63-billion-yen loss from associates was booked by SoftBank, as its convertible preference shares of Alibaba were treated as a liability, just before the Initial Public Offering of the e-commerce group, which is based in China. According to the statement SoftBank, the preference shares of Alibaba will be transformed into ordinary stock after the IPO is finalized and the company will recognize gain in the future.

No official projection for the year through March 2015 was released by Softbank Corp., but the company shared that it expects an operating profit of about 1 trillion yen excluding the one-off investment gains.

According to people with knowledge of the matter, the company has dropped its plan to purchase T-Mobile U.S. for about 32 billion dollars. The Chief Executive Officer of the company Mr. Masayoshi Son has shared that Softbanks subsidiary Sprint needs to become more powerful in order to compete with the current leaders on the market – Verizon Communications Inc. and AT&T Inc.

As reported by the Wall Street Journal, Mr. Son said: “SoftBank is known for its strength in sales and marketing. With the network upgraded, we can focus on our sales efforts.”

Softbanks subsidiary Sprint ended the acquisition talks with T-Mobile. According to a person close to the negotiation process, the company dropped its offer due to regulatory concerns, which offset the potential benefits of combining the two companies, which are currently known as the third- and fourth-largest wireless providers on the territory of the U.S.

Softbank Corp. was 3.41% down to close at 6,801 Japanese yen per share yesterday, marking a one-year change of +10.23%. According to the information published on the Financial Times, the 11 analysts offering 12-month price targets for Softbank Corp. have a median target of 9,800 yen, with a high estimate of 10,200 yen and a low estimate of 7,800 yen. The median estimate represents a 39.18% increase from the last price of 7,041 yen.