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Softbank posts profits on iPhone sales, fends off rivals

updated 09:35 pm EDT, Thu April 26, 2012

Beats back challenge from KDDI

The iPhone continues to be the key for growth and profits with cellphone carriers in Japan, as third-ranked provider Softbank Corporation posted a 65.4 percent increase in profits for its fiscal year, which ended in March. The company credited growing subscriber numbers and iPhone 4S demand as factors, despite the emergence of rival KDDI Corporation as an alternative provider of iPhones. The company had spent heavily on promotions to avoid having customers change to KDDI.

The discounting and promotions had lessened the company's profit in the previous quarter, but was deemed unnecessary to continue as relatively few customers had actively switched. Softbank has since decided to invest promotional money in upgrading its infrastructure and network to make that the compelling reason for customers to choose it.

Overall, the company reported an annual net profit of $3.85 billion, up from $2.3 billion the year before, reports The Wall Street Journal. Annual operating profit was up less dramatically, rising to $8.3 billion from $7.75 billion on revenue of $35.9 billion, up 6.6 percent from the year before. The figure includes $937 million gained from the divestment of Softbank's shares in struggling US search engine Yahoo.

Net profit for the final quarter was $785.5 million, almost 50 percent from last year's final quarter profit of $584.5 million. The company gained 3.54 million subscribers over the year, compared to just 2.12 million for market leader Docomo and 2.11 million for KDDI.

The company credited the rise in subscribers equally with sales of the iPhone 4S in explaining the company's growth, which had "far exceeded" executive predictions made in late 2008 at the beginning of the global financial crisis. More customers using data-intensive iPhones and iPads had provided increased revenue, it said, with typical monthy revenue rising 10 percent year-over-year in 2011.

Softbank plans to increase subscribers by adding a 900MHz band to its mobile network that it says will be more efficient and offer wider coverage. The company's stock has risen almost four percent on the strength of the earnings report. [via The Wall Street Journal]

by MacNN Staff




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