Japan's nascent love affair with the internet suffered a blow yesterday with the announcement of a sharp profit decline by Softbank, the country's largest investor in the web.

The vast holding company, run by internet tycoon Masayoshi Son, posted net income of ¥8.4bn (£670m) for the year ending March 31. This was 77% down on the company's performance last year.

According to analysts Softbank was only able to stay in the black thanks to a one-off ¥220bn sale of some of its prime internet assets, including anti-virus software developer Trend Micro and the e-commerce system provider Softbank Technology.

With major holdings in Yahoo!, E*Trade and more than 300 other internet firms, Softbank is one of the world's biggest e-investors. But this has made it particularly vulnerable to the ups and downs of dot.com share prices.

After rising more than twentyfold in the year to February, Softbank's stock price has plunged by 75% as investors have turned their backs on internet shares.

The shift back towards the old economy of more estab lished Japanese firms has been accelerated by the latest corporate results, which have shown many big manufacturers returning to the black after years in the doldrums. According to one survey, Japan's listed companies racked up an average profit growth of more than 90% in 1999.

Despite Softbank's slide in the opposite direction Mr Son was unrepentant, and vowed to focus even more closely on web-related businesses. He said the company's decision to sell holdings in Kingston Technology, a US motherboard manufacturer, and Ziff Davis, a media group, were proof of the company's intentions.

"We are now closer to becoming a pure internet company," he said. "With our pool of investments we will catch on to the fast growth that is the internet."

In an effort to regain in vestor interest, Mr Son announced that the Softbank group will float several of its group companies - including the financial unit Softbank Finance, which racked up some of the group's most impressive growth. Reports about the plan helped to push up Softbank's share price yesterday by the maximum daily limit of 12.4% - suggesting that Mr Son may succeed in recovering from this latest setback.