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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?

Tags: sony, playstation, sony corporation, daniel loeb

5/14/2013 9:44:38 PM Ben Dutka

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Comments (14 posts)

frylock25
Tuesday, May 14, 2013 @ 10:47:21 PM
Reply

so what parts of sony would split from each other? i dont get what the devisions are. like gaming from everything else as in tvs and stereo equipment.

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Simcoe
Tuesday, May 14, 2013 @ 11:57:26 PM

Maybe a break-up into three companies. Hardware, Media (Sony Picture + Sony Music + Sony Computer Entertainment) and Financial Services (Banking and insurance - in Japan).

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WorldEndsWithMe
Tuesday, May 14, 2013 @ 10:48:33 PM
Reply

I wish I understood why all that would be beneficial, but I don't so I can't comment. Oops, just did.

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Xombito
Tuesday, May 14, 2013 @ 10:51:21 PM
Reply

Its all greek to me.

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AcHiLLiA
Tuesday, May 14, 2013 @ 10:56:09 PM

greek, lol.

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Xombito
Tuesday, May 14, 2013 @ 11:57:58 PM

Yeah greek. Right?

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Underdog15
Wednesday, May 15, 2013 @ 8:43:41 PM

Since we're on electronics,

It's all Geek to me.

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Amnesiac
Wednesday, May 15, 2013 @ 12:15:31 AM
Reply

Oh I get it, after splitting the company who would run this newfangled entertainment division???

ANSWER:
Billionaire Daniel S. Loeb!


It's a drunken punch-up at a wedding

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wackazoa
Wednesday, May 15, 2013 @ 10:53:48 AM

I dont think it's that. Seems Mr. Loeb just wants more money.

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Axe99
Wednesday, May 15, 2013 @ 10:08:08 AM
Reply

The old debate over whether a single-focus company or a broad conglomerate is best has been going on since the dawn of time - they both have pluses and minuses. I'd be wary of taking any hedge fund investors view on these things though - they tend to be far too focussed on short-term returns, and no-where near enough focussed on long-term benefits, and tend to not understand the depth of the business very well. Could be wrong with Loeb, but just because they've made a lot of money doesn't mean they know how to run a business, just how to milk one ;). As gamers, we want a business that's well run, not one that can make a quick buck for investors.

Last edited by Axe99 on 5/15/2013 10:08:30 AM

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Shams
Wednesday, May 15, 2013 @ 10:10:09 AM
Reply

Divide and conquer.

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Underdog15
Wednesday, May 15, 2013 @ 8:44:14 PM

Except that phrase usually refers to dividing the opposition. Not yourself. ;p

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wackazoa
Wednesday, May 15, 2013 @ 10:51:56 AM
Reply

Well the only reason he would want the company to split is obvious, the price of stock. He would benefit from the company either buying back his stock so they can split up or spliting his stock 2 or 3 ways as the companies become stand alone.

Only things that dont make sense to me is that 1. It would increase the stock volativity and 2. The Insurance arm is a big profit maker for Sony, so if that is split off then the rest of the company doesnt make as much profit, if at all.

My guess is the guy is trying to get Sony to buy out his shares. He asks after the company posts a profit for the first time in years, so it sounds fishy to me. Im sure Mr. Loeb has 1.1 billion reasons why he wants out.

Last edited by wackazoa on 5/15/2013 10:53:13 AM

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Rogueagent01
Wednesday, May 15, 2013 @ 9:26:50 PM
Reply

I would rather they stay together, since then they can takes great losses within one branch while the others make profit to offset the losses. They are spread out enough and have enough competition to avoid any kind of monopoly, and since they have such forward thinking, keeping them all under one roof allows for much greater risks. Sorry Loeb I disagree with you on this one.

Last edited by Rogueagent01 on 5/15/2013 9:27:27 PM

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