Softbank's first-half net profit down 22%

TOKYO —

Mobile carrier Softbank, which this month announced a $20 billion takeover of U.S. firm Sprint Nextel, said its half-year net profit tumbled 22% from a year ago. The company posted a net profit for the six months to September of 169.4 billion yen. Sales rose 3.3% to 1.59 trillion yen. Softbank said its half-year profit fell because of a special loss related to the slumping stock price of online games firm Zynga, in which it has a stake.

The fall in the net profit also reflected a reduction in special income this fiscal year, compared with last year when Softbank earned 83.5 billion yen from sales of investment securities, including shares in Yahoo!. Softbank, which has benefited from the popularity of Apple’s iPhone and iPad products, continued to increase its customer figures.

The company said it expected to earn at least 700 billion yen annual operating profit for the year to March, as it remained focused on expanding its mobile network and customer base. The carrier also said it was on track for reaching a goal of earning one trillion yen in operating income in its domestic business by March 2017.

The cross-ocean marriage with Sprint one of the biggest overseas acquisitions ever by a Japanese firm will see Softbank take 70% of the company, the number three U.S. carrier behind AT&T and Verizon Wireless. Investors and analysts have cast doubt on the deal, which will see already heavily-indebted Softbank taking on even more loans.

Moody’s and Standard & Poor’s both put Softbank’s credit rating under review for a possible downgrade, saying the takeover would heap pressure on an already debt-heavy balance sheet. Chief executive Masayoshi Son, Japan’s second-richest man, has acknowledged risks associated with the deal, but also stressed that non-action is probably a bigger risk for his company.