Softbank hit by $758m charge on CDO defaults

Japanese operator Softbank's earnings will be impacted by an unexpected 75 billion yen ($758.7 million) loss as a side-effect of the acquisition of Vodafone's Japanese operations.

The charge was related to defaults on the collateralized debt obligations (CDOs) it had taken out to insure against defaults on its loans, Softbank said. Softbank will redeem the bonds through a credit line facility provided by Mizuho Corporate Bank.

But despite the charge, Softbank has added 10 billion yen to its 2008 earnings forecast, due to gains from the company's cost-cutting measures. The company now expects to post an operating income of 350 billion yen when it announces its results on April 30.

The company expects the charge to impact net income by 44.4 billion yen. Softbank declined to provide a net profit forecast, but said the figure will remain positive despite the unexpected charge.

Softbank also said no further losses will be incurred as a result of the defaults.