Japan iPhone carrier Softbank says business soared in April-June but profits fell due to taxes

Softbank profits fall in April-June on heavy taxes

TOKYO — Softbank Corp., which runs the only Japanese mobile carrier to offer the iPhone and iPad, said Thursday the popular products drove its strong performance last quarter, but its net profit fell 29 percent due to a tax hit.

The Tokyo-based Internet and communications conglomerate also said it had invested $150 million in California-based Zynga Game Network Inc., which runs some of the most popular games on Facebook and other sites, including “FarmVille,” ”FrontierVille” and “Mafia Wars.”

The companies said they would establish “Zynga Japan,” a joint venture to offer social video games. Along with its successful mobile business, Softbank operates an array of popular Internet sites, including Yahoo Japan, the country’s dominant search and auction site.

Softbank said it booked 19.4 billion yen ($223 million) in net profit during its first quarter, down from 27.4 billion yen from a year earlier. Revenue rose to 700.8 billion yen versus 666.3 billion yen, while operating profit surged higher.

CEO Masayoshi Son said that Apple’s iPhone 4, which went on sale at the end of the quarter, had “far exceeded” his expectations, and apologized to Japanese customers for a shortage of supply. He said Softbank added 696,600 subscribers in the three months, many plundered from rivals that don’t offer the Apple products.

“We ship and we ship, and then we immediately get more new orders,” he said.

He said Apple’s tablet computer, the iPad, was also selling strongly and particularly drawing interest from large corporations. Some consumers have wondered whether they should opt for the portable iPhone or larger iPad, but he recommended they get both, noting that in history Japanese warriors often carried two swords — a shorter one and a longer one.

Softbank said the drop in profit came from a 26.5 billion yen tax charge related to Yahoo Japan’s purchase of a data center operator announced last year. The company is protesting to tax authorities about the charge.

But Softbank reported a strong performance across its core businesses, including its Internet properties, which saw profits rise as advertising revenue increased. Operating profit, seen as an indicator of actual business performance, rose about 45 percent in the quarter across the company.

Before results were announced, Softbank shares fell 1.1 percent to 2,595 yen on the Tokyo Stock Exchange.