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Sony sells all Square Enix stock

Sony sells all Square Enix stock

Thu 17 Apr 2014 6:59am GMT / 2:59am EDT / 11:59pm PDT
BusinessFinancial

UPDATE: The stock sale was worth almost $150 million, Sony will record a gain of $48 million in its fiscal report

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

Update: Sony has announced that the value of the total sale was ¥15.3 billion ($150 million). The company will receive net cash proceeds on April 21, 2014.

Original Story: Sony Computer Entertainment Inc. has sold all of its stock in Square Enix Holdings, amounting to 9.52 million shares.

The sale, which was made to SMBC Nikko Securities Inc., will result in a gain of around ¥4.8 billion ($47 million), which Sony will record as "other income" in its consolidated financial results for the first quarter of the current fiscal year (ending March 31, 2015).

Sony offered no reason for the sale, though it will disclose the official price in an announcement tomorrow.

Square Enix has experienced a difficult few years, but its last two quarterly reports have showed a return to profitability. Indeed, its share price has improved over the last 12 months, though it has fallen to ¥1685 after hitting a five-year high of ¥2895 in January.

Sony, meanwhile, is in the midst of a broad strategy to reduce costs, which has included the closure of retail stores, the sale of valuable office space and thousands of redundancies.

9 Comments

Kenneth Bruton
Producer

38 8 0.2
It would not surprise me if Sony also has a stake in Microsoft and Nintendo (in a minority, of course...) Mr. Yoshida bought 2 Wii U systems...seems logical enough, I suppose...

Posted:3 months ago

#1

Steve Wetz
Reviewer/Assistant Editor

168 377 2.2
Considering that at one point Sony was a majority owner of Square Enix, this is very telling of Sony's confidence in Square's continued financial profitablility. Considering they probably know something we don't, I expect to see a story about job cuts at Square forthcoming.

Posted:3 months ago

#2
Already started. Square Enix's India Studio was shut down a few days ago. There is talk of redundancies in their Latin American studios as well.

Posted:3 months ago

#3

Christian Keichel
Journalist

577 790 1.4
I don't understand it, from todays Bloomberg article:
Sony agreed to sell its stake in Tokyo-based Square Enix to SMBC Nikko Securities Inc. for 15.3 billion yen ($150 million) and will book a 4.8 billion-yen gain on the sale in the first quarter, according to statements today and yesterday.
http://www.bloomberg.com/news/2014-04-16/sony-struggles-to-meet-demand-for-playstation4.html

When Sony sells shares for 15.3 billion yen, why they will only book 4.8 billion yen gain for the first quarter of the fiscal year?

Posted:3 months ago

#4

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
Christian, I'm wondering if that's just a mistranslation and Sony are stating they are making a gain of 4.8 billion yen from the price they originally purchased the stock at.

Posted:3 months ago

#5

Andrew Ihegbu
Studying Bsc Commercial Music

436 146 0.3
@Christian, because the net lump sum isn't paid all at once. Companies sell often on very short term interest free credit. This is so SMBC Nikko's CEO doesn't mess up it's expenditures books for the coming quarter as harshly. Recording 3 times that they spent 50mil in acquiring companies looks better than one 150mil drop in profits any investors cringing over their reduced dividends in a single month.

Posted:3 months ago

#6

Christian Keichel
Journalist

577 790 1.4
@ Andrew

Perhaps that's an explanation, but Sony's press release from today says the deal will be done on April 21, 2014.
Sony today announced that the sale price was approximately 15.3 billion yen and that Sony will receive net cash proceeds, on a consolidated basis, from the sale of the same amount on April 21, 2014.
http://www.sony.net/SonyInfo/IR/news/20140417_E.pdf

Yesterdays press release said:
As a result of the sale, Sony expects that a gain on the sale of approximately 4.8 billion yen would be recorded as other income in Sony's consolidated financial results, in the first quarter of the fiscal year ending March 31, 2015.

Sony expects to disclose the sale price of the shares tomorrow morning, April 17, 2014 (JST) and to disclose its forecast of the consolidated financial results for the fiscal year ending March 31, 2015 in the earnings release for Sony’s consolidated financial results of the fiscal year ended March 31, 2014, which is scheduled to be announced on May 14, 2014.
http://www.businesswire.com/news/home/20140416005563/en/Sony-Corp-UK-Regulatory-Announcement-Sale-SQUARE

I don't have enough knowledge to see from these quotes, if this means Sony will receive 15.3 billion yen from the sale, or if it means, they sold shares worth 15.3 billion yen, but will receive 4.8 billion yen "on a consolidated basis".

Edited 1 times. Last edit by Christian Keichel on 17th April 2014 3:43pm

Posted:3 months ago

#7

Christopher Ingram
Editor-at-Large

44 35 0.8
I think that regardless of the finite price value of the sale, this transaction doesn't look to bode well for Square Enix; though, it does show that Sony is still showing signs that it is serious about patching the company up and minimizing its losses.

Posted:3 months ago

#8

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