Softbank released its earnings for the first quarter ended 30 June 2008, revealing an 8.1 percent climb in operating profit to 85.1 billion yen ($788 million). Net income fell 22.9 percent to 19.4 billion yen ($180 million) from 25.1 billion yen ($233 million) year on year, while sales declined 2.4 percent to 647.3 billion yen ($6 billion). Still, the record operating profit, driven by reduced handset subsidies and new subscribers additions, missed analyst expectations, which according to a Bloomberg survey had forecast 86.1 billion yen ($798 million). Profitability took a hit as Softbank used discounts and installment plans to lure new customers from rivals NTT DoCoMo and KDDI.

Softbank, the only carrier in Japan to carry the iPhone, also announced that it would be cutting monthly tariffs for the handset, which Chief Executive Masayoshi Son said would make it “easier for so-called entry-level users to jump in,” reports Reuters.

Softbank lowered monthly charges for iPhone subscribers to as low as 2,990 yen ($28) from 7,280 yen ($67). Previously, data was charged at a flat rate of 5,985 yen ($55) a month. Customers can now opt for several data options, starting at 1,695 yen ($16) a month. Son added, “iPhone buyers tend to be heavy cellphone users and have a higher ARPU (average revenue per user) than users of ordinary handsets, so business-wise we will do well enough.” Softbank did not disclose the number of iPhones it has sold since the handset’s July 11 debut.

Might the lowered tariffs be an indication that the iPhone isn’t selling as well as the carrier would like? There has been much speculation over how the iPhone will fare in super tech savvy Japan where the majority of handsets are laden with advanced features. Son himself has expressed reservations. When Softbank first announced pricing for the gadget, the carrier said it was shifting from its usual course of using low prices to attract users. Son said at the launch, ““There have been users who were just attracted to our low price, but the main point this time is feature attractiveness rather than price.”

Softbank added 525,500 subscribers in the quarter, more than twice as many as DoCoMo (NYSE: DCM).

Release

• Softbank Shifts Strategy With iPhone; Prices Device Starting At $215
• Earnings: NTT DoCoMo Profits Up 41 Percent; Boosted By Reduced Handset Subsidies