Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

SoftBank Group Corp.'s earnings have been a little unstable of late.

Buckle up, though. It's about to get a whole lot more bumpy.

Off the Charts
Net income growth swings at SoftBank are enough to give investors nausea
Source: Bloomberg, SoftBank

Masayoshi Son is plunging his empire into the great unknown. His decision to pull SoftBank's U.S. telecom firm Sprint Corp. out of merger talks with T-Mobile US Inc. is enough to make Sprint's investors sweat, as Gadfly's Tara Lachapelle outlined earlier.

But there are worries for shareholders back in Japan, too. While Son's $97.7 billion Vision Fund is set to be a dominant topic in coming years, SoftBank's income statement in recent quarters looks as unstable as a ship in a storm.

More Swings Than Roundabouts
The operating profit that SoftBank reports, versus what the market was expecting, is starting to vary more greatly
Source: Bloomberg

Take the Japanese conglomerate's investment in Alibaba Group Holding Ltd. A "collar transaction embedded in a variable prepaid forward contract for Alibaba shares" explains how SoftBank delivered a 508 billion yen derivatives loss in the six months through Sept. 30. That's right, SoftBank's Alibaba stake turned out to be a $4.4 billion albatross for this period, but that figure will probably swing wildly as SoftBank revalues it every quarter.

Step Machine
SoftBank's net income comes in peaks and troughs
Source: Bloomberg, SoftBank

Then there's Nvidia Corp. SoftBank took a chunk of the graphics chip designer earlier in the year, helping it post a healthy non-operating profit in the June quarter as Nvidia's shares rocketed. Its stock continued to climb in the most recent period, but that stake is being handed over to the Vision Fund, meaning SoftBank shareholders will reap far smaller rewards.

Blade Runner 2017
Nvidia shares have delivered impressive returns to shareholders, including SoftBank, as the company benefits from a move toward artificial intelligence
Source: Bloomberg

ARM Holdings Plc, the British semiconductor company that SoftBank bought 12 months ago, will also be reassigned to the Vision Fund. This may not be such a bad thing for SoftBank shareholders since Son has somehow managed to turn a decade of quarterly profit into two straight quarters of operating loss, widening most recently to 7.86 billion yen.

Even SoftBank's mainstay domestic telecom unit hasn't been able to offer stable earnings or margins, which is significant because this is the business that provided one-third of sales and two-thirds of total operating income last year.

For investors less concerned about the P&L, it's worth considering SoftBank's cash flow statement. A look at the past decade of quarterly free cash flow shows just what effect Son's borrow-and-spend approach has had.

Jagged Peaks
Those who don't like income as a metric can always look at SoftBank's free cash flow. It may not make them feel any better
Source: Bloomberg, SoftBank

As the Vision Fund kicks into high gear and SoftBank switches to Plan B for Sprint, there's little chance earnings instability will dissipate. Perhaps some shareholders are OK with that, betting that the long-term future of Son's strategy outweighs any short-term noise. But anyone deciding to stay invested in this vision better have a strong stomach.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at

To contact the editor responsible for this story:
Katrina Nicholas at