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.
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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
Report: AT&T Eyeing $40B DirecTV Purchase
May 1, 2014, 8:00 AM
WebOS Class Action Settlement Costs HP $57 Million
April 1, 2014, 10:22 AM
IBM Workers Strike Over Terms of Deal That Will Have Them Working for Lenovo
March 6, 2014, 9:29 AM
Google Picking Up Artificial Intelligence Company "DeepMind" for $400 Million
January 27, 2014, 9:25 AM
Quick Note: Qualcomm Grabs up Palm, IPAQ, and Bitfone Patent Portfolio from HP
January 24, 2014, 9:18 AM
Verizon Buys Intel Media OnCue Cloud TV assets
January 21, 2014, 10:26 AM
Most Popular Articles
iBend: Reports Grow of Razor-Thin iPhone 6+ Folding Like Origami in Your Pocket
September 23, 2014, 6:08 PM
Appalling Negligence: Decade-Old Windows XPe Holes Led to Home Depot Hack
September 8, 2014, 8:58 PM
iPhone 6's "Focus Pixels" Are Already Used in Galaxy S5
September 23, 2014, 3:10 PM
New AT&T Mobile Share Value "Double Data" Promotion Lasts Through October
September 28, 2014, 8:32 AM
Update: Apple Releases iOS 8.0.2 Update to Make Up for Botched 8.0.1 Release
September 25, 2014, 8:19 PM
Latest Blog Posts
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
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information