Daniel Loeb's Third Point Calls for Breakup of Sony—Again
Wall Street Journal (06/13/19) Thomas, Patrick
Third Point LLC said in a June 13 letter to investors that Sony's (SNE) stock is undervalued and that the company's portfolio needs to be less complicated. Third Point said it has invested $1.5 billion in developing its stake in the company. Third Point called on Sony to spin off its semiconductor business and sell off stakes in Sony Financial and other units in order to position itself as a leading global entertainment company. This marks the second time in six years that one of the world's highest-profile investors has engaged the Japanese electronics giant. Last time, though, Loeb pushed for a very different kind of shake-up, advocating a spin-off of entertainment assets. According to Loeb, the semiconductor division is "often treated by investors as an afterthought" and should be spun off into a Japan-listed company known as Sony Technologies. The hedge fund has also called on Sony to consider selling its ownership interests in M3, Olympus, and Spotify Technology. By selling off these stakes, Third Point said Sony can "meaningfully reduce complexity" that has been a significant negative factor in the company's valuation. Sony said it will take the input of shareholders "seriously" and "engage in constructive dialogue" with shareholders. Meanwhile, Third Point has nothing but praise for Sony's Hollywood studio, noting that Sony Pictures is one of the few independent film studio franchises not owned by a major telecommunications or media conglomerate such as AT&T Inc. (T), Comcast Corp. (CMCSA), and Walt Disney Co. (DIS). And while Third Point is pushing for change, Sony executives announced in May they are looking at ways to create stronger links within its business, especially content, intellectual property, and direct-to-consumer services. The company also stated last month that it is considering joining with long-time game console system rival Microsoft Corp. (MSFT) on cloud and game-streaming technology.
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