Sony May Consider Spinning Off Entertainment Division
May 22, 2013 8:19 AM
comment(s) - last by
Kazuo "Kaz" Hirai, President and CEO of Sony Corporation
Sony Entertainment spinoff likely
Sources indicate that Sony Corporation is currently considering a proposal from one of its top shareholders, Third Point LLC, to spin off its movie and music businesses.
reports that hedge fund manager Daniel Loeb’s hedge fund, which owns 6% of Sony’s stock worth roughly $1.1 billion, called on Sony to spinoff its profitable entertainment arm amid a decline in some other segments.
News of the potential spinoff sent shares of the company up 9% with shares trading at $22.87 yesterday afternoon.
Wall Street Journal
reports that Sony has announced that it plans to discuss the proposal with its board.
"The proposal from Third Point, Dan Loeb is something that we should discuss thoroughly at a board meeting and then we'll decide Sony's stance," Chief Executive Kazuo Hirai said in a briefing Wednesday to lay out his strategic vision for the company. "Therefore, we are now going to start the discussion and we are still at the starting stage."
Hirai didn't offer any timeframe for the discussions.
Loeb believes that taking up to 20% of Sony's Entertainment Division public would help generate capital needed to
overhaul Sony's ailing electronics business
. Sony performed something very similar in 2007 when its banking and insurance unit made an IPO.
Sony is mostly known as an electronics company, but electronics are not the segment that generates most of the company's revenue. Sony's entertainment and insurance units generate the vast majority of company profits.
Sluggish sales in the electronics market (TVs, digital cameras, computers, etc.) are having an impact on Sony's bottom line. Sony has also found it increasingly difficult to
compete in the smartphone market
, but the company is beginning to shift more of its focus there because of significant growth potential.
Wall Street Journal
This article is over a month old, voting and posting comments is disabled
5/22/2013 9:09:37 AM
If they spin it off, they can't distribute stock to current shareholders. Spin off is selling because they are receiving something. If they keep majority share then they could have control. Control doesn't mean Sony Ent. will be able to pass its profits to Sony though.
That's not a good long term solution though. The only time it's good is when that spin off entity directly do work for the main branch. That way, their revenue and expense are tied together. One company's expense is the other's revenue. Expense is tax deductible so it benefits them. Spin off is also for liability reasons. It is also used to make their financial statements look better.
You usually only to spin off the underperforming divisions for all those reasons. It doesn't make sense take away your star.
5/23/2013 9:18:14 AM
If they keep a majority+ share of the spin-off, the subsidiary merely passes its profits to its own shareholders, which is mostly Sony....
There are lots of reasons to manipulate resources in this way. One obvious one is to allow the more successful entertainment business to get better rates for its financing, but there are a host of legal, tax and accounting reasons which might apply.
"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer
Sony Unveils Waterproof Xperia ZR Smartphone
May 13, 2013, 9:30 AM
Sony Posts Poor Quarterly Earnings, Cuts Sales/Profit Predictions
August 2, 2012, 1:59 PM
Tech's Tax Day Fortunate Few: Qualcomm, Xerox, GE, et al. Pay Little or No Taxes
April 15, 2015, 11:30 AM
LinkNYC Terminals to Blanket New York City With Free WiFi, Free Calls, and Ads
November 17, 2014, 6:50 PM
Microsoft is Open-Sourcing Most of .NET, Adding OS X and Linux Support
November 12, 2014, 8:27 PM
Home Depot Lost 53 Million Emails, Blames Windows, Buys Execs New Macs
November 9, 2014, 5:00 PM
Former NSA Lawyer: If Google, Apple Encrypt User Data, They’ll Wither on the Vine Like Blackberry
November 6, 2014, 12:15 PM
Report: AT&T Eyeing $40B DirecTV Purchase
May 1, 2014, 8:00 AM
Most Popular Articles
Raytheon $1.9 Billion Purchase of Websense Raises Tough Questions
April 20, 2015, 1:57 PM
HBO to VPN HBO Now Users: Prove You Live in U.S. or We Will Terminate You
April 21, 2015, 12:17 PM
AMD CEO: Windows 10 Will Launch at "The End of July"
April 20, 2015, 7:24 PM
Quick Note: Lady Macbath -- One Japanese Woman's Apple Themed Revenge
April 23, 2015, 11:47 AM
After Record-Setting Week, Samsung Predicts 70 Million GS6/GS6 Edge Sales
April 17, 2015, 8:39 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2015 DailyTech LLC. -
Terms, Conditions & Privacy Information