Japan's Softbank Corp. said Wednesday its operating profit for the second quarter reached a record high on cost cuts as the iPhone pulled in more mobile phone subscribers.

The Internet and telecom company upgraded its annual operating profit forecast on the back of its solid performance, even though sales slumped.

Softbank said July-September operating profit jumped 7.3 percent year-on-year to a record 180 billion yen (1.86 billion dollars) as unit Yahoo Japan expanded earnings and units Softbank Telecom and Softbank BB aggressively cut costs.

However, net profit fell 11.5 percent to 41.1 billion yen, while sales also dropped 2.6 percent to 1.3 trillion yen on weakening mobile phone sale.

The company's mobile phone carrier Softbank Mobile benefited from the July launch in Japan of Apple Computer's iPhone 3G, allowing Softbank to attract more customers than its rivals NTT DoCoMo and KDDI's "au" service.

Softbank president Masayoshi Son, one of Japan's richest people, said he used an iPhone every day.

"It's useful, and the more I use it the better I can understand its strong points," he told a news conference.

Softbank, which entered the mobile market by buying British giant Vodafone's struggling local unit in 2006, anticipates rising profits from next-generation mobile phones, Son said.

Softbank's retention of mobile phone customers has also improved with the iPhone, he said.

However, its mobile customers are spending less time using their phones, with Softbank's income from voice calls continuing to slide, although earnings from data services edged up.

Son said the company, which holds sizable shares in major Internet companies in Asia, including China's Alibaba, aims to further expand its broadband operations in the region.

But Softbank said that its revenue fell as lower costs for handsets offset the solid performance of Internet units.

For the year to March, the company upgraded its operating profit forecast to 340 billion yen, up from an earlier projection of 324.2 billion yen.

Son, however, warned that the company may suffer as much as 44.4 billion yen in extra losses because part of its financial commodities may end in default in the wake of the global financial crisis.

The company did not offer forecasts for annual sales, saying that mobile handset sales fluctuate on too many factors.

It also refrained from issuing a forecast for annual net profit, citing the volatility of its securities holdings, among other investment instruments.

Source:AFP