Billionaire Investor Calls For Sony Split
Maybe the way to make the entertainment division shine is simple: Break away from the other corporate branches.
According to a New York Times report, a certain legendary hedge fund investor has called for Sony to split its business apart. He wants to see the entertainment division (a "hidden gem") break free.
Billionaire Daniel S. Loeb (Third Point) has total invested stocks worth $1.1 billion in the electronics giant and is currently one of its largest shareholders. Apparently, Loeb has personally delivered a letter to CEO Kazuo Hirai asking for the split:
"Sony has stood for innovative engineering and consumer satisfaction for decades. From televisions to gaming consoles to handsets, Sony epitomizes the proud legacy of Japanese manufacturing ingenuity, superior product design, and excellent user experience.
However, many casual observers would be surprised to learn that while Sony is electronics, much of its current value is derived from a hidden gem--Sony's Entertainment division. Like many conglomerates [Third Point has] invested in previously, Sony has two strong businesses facing different challenges side by side, each obscuring the other's true worth.
To maximize Sony's overall success, we believe the Company should change the structure of its ownership of Sony Entertainment. Doing so will strengthen Sony by reducing its burdensome debt, thereby providing additional resources and capital to focus on revitalizing the resurgent Sony Electronics."
It remains to be seen whether or not Sony will respond positively to Loeb's proposal, but Hirai is expected to talk about the future of the company next week. At that time, he may address the situation at hand. So, do you think it's a good idea for Sony's entertainment division to break away from the rest of the company? Will that work?
5/14/2013 9:44:38 PM Ben Dutka