Sony's largest investor calls for break-up
Hedge fund manager Daniel Loeb suggests splitting Sony Entertainment from Sony Electronics, says they're obscuring each other's worth
Last week, Sony announced a return to profitability in its full-year financial results, but that wasn't enough to please one of its largest shareholders. As reported by the New York Times, hedge fund manager Daniel Loeb is calling on Sony to split up its business.
Loeb is the CEO of Third Point, LLC, which claims to be Sony's single largest investor, controlling more than $1.1 billion worth of the electronics giant's shares, or about 6.5% of the company. In a letter hand-delivered to Sony CEO Kaz Hirai today, Loeb called for Sony to "partially spin-off" its Sony Entertainment business, which covers music publishing, cable networks, and production of movies and TV shows. That would leave behind Sony Electronics, which includes the PlayStation business, as well as cameras, smartphones, and TVs.
"Like many conglomerates we have invested in previously, Sony has two strong businesses facing different challenges side by side, each obscuring the other's true worth," Loeb explained in the letter.
Loeb proposed letting existing Sony investors own Sony Entertainment more directly, offering them subscription rights rather than holding a traditional spin-off or public offering. The move would give Sony an injection of capital while ensuring shareholders' economic interests are protected, Loeb said. The hedge fund manager also offered to take a more hands-on approach to enact his plan.
"Beyond Third Point's willingness to help facilitate a public offering for Sony Entertainment, we offer our assistance to implement our proposal and would gladly accept a seat on Sony's Board of Directors," Loeb said.
A Sony representative told the Times that the company welcomes investments and welcomes constructive dialogue with shareholders, but noted that Hirai has previously asserted Sony Entertainment is not for sale.
I would concur that it`s only a theory in the current console market, progress can come in many forms, t can be hardware, softwre or services. PSN+ would be a very good example how competition can lead to better services. Because of the competition from Xbox LIVE Sony decided to change certain things for PSN. In that case it was the introduction of PSN+ and "free" games every month. Thanks to Xbox LIVE people get next month games like Kingdoms of Alamur on PSN+.
to me it seems more of a kind of corporate buy-out that Loeb is proposing. ( and one more of the kind that you see when a particular company is under-performing and/or bleeding money from its shareholders ). This smells more of a proposed takeover and buy out than merely being about the Playstation 4 offering up EA games for 'free' if you keep up your subscription ( so, strictly speaking they are not 'actually' free, are they? )
The entertainment division has taken some drastic losses in recent years, ( and claiming a morale boosting 'victory' in sales at the end of the generation when the competition isn't even concentrating on their outgoing hardware any longer is, frankly, quite pitiful ). I think what Loeb may be warning of to Hirai, ( whether he states otherwise or not ), is that there are only going to be so many more failures in the Sony Entertainment portfolio that will be permitted before the financial backers demand a change of direction and management. ( and probably even ownership )
Sony Entertainment is having its rear-end handed to it on all fronts by a myriad of industry specific manufacturers and companies, whereas they continue to try and wear so many different hats its looking like they don't know which head to put them on any longer?
I fear for the entertainment division if the Ps4 does not come out of the gates firing on all cylinders, but as is the way with Sony it will have shoddy PR, holier-than-thou mismanagement issues and a ridiculous price tag which gets slashed six months later when they launch a slim version.
Samsung must be rubbing their hands in the wings if the rumours of interest from them holds any truth to it?
Any investor that would want Sony to sell SCE doesnt know much about the company. Did the PS3 sell as good as the PS1 or PS2? No but it still sold over 80 million by now. Console market isn't about who sells more in first year.
I didn't find the price for the PS3 too high at launch. A stand alone BluRay player at time cost almost the same and if you would have had a 360 with all the add ons of bigger HDD, WiFi, HD-DVD, controller charger kit you payed more in total.
Edited 1 times. Last edit by Private on 16th May 2013 11:26am