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
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(Yet) Another example why....
5/22/2013 9:35:26 AM
The opinions of stock market traders should be ignored when making business decisions.
The interests of traders are completely at odds with the long term stability of a company (or even a whole national economy).
Trader: "How do I make a fast buck?"
CEO: "How do I generate long term growth and profit?"
Governments should be completely ignoring them when deciding economic policies too - not that they'll ever realise that.
RE: (Yet) Another example why....
5/22/2013 4:23:50 PM
Agreed. This is a move for that large shareholder to cash out with a large profit, while screwing the company. It reminds me of Richard Gere in Pretty Woman, who bought companies, just so he could split them up and sell them in more profitable chunks. Good for the investor, bad for the company.
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
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