• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

AMerican Hedge Fund Manager attempts to break up Sony

DBT85

Member
Just seen it on CNBC. Lets see what occurs.

In b4 "PS4 doomed"

The hedge fund manager, Daniel S. Loeb, is pressing Sony into spinning off part of its entertainment arm, which includes one of the biggest film studios in Hollywood and one of the largest music labels in the world, responsible for movies like “Skyfall” and artists like Taylor Swift.

The investor believes that spinning off a portion of the entertainment business to Sony shareholders could sharpen the company’s focus and lead to higher profit margins, while helping to revive the core electronics business. Mr. Loeb is also pressing for the spinoff of Sony’s insurance division, which accounted for much of the company’s profit last quarter.
 

M.D

Member
Can someone explain this better? Is he basically using his power as one of the big shareholders to demand changes? can he even do that? wouldn't he need other shareholders to do the same?
 
http://dealbook.nytimes.com/2013/05/14/hedge-fund-manager-daniel-loeb-targets-sony-for-a-breakup/?smid=tw-share

Would the gaming division been able to stand alone without the support of the rest of sony over the last few years?

Loeb has a 6.5 Percent Stake in Sony Becoming One of Its Largest Shareholders


Lock if old

What does this mean for the PS4?

Canceled.

Nothing.

The spin-off/breakup here just means that Sony will offer its ownership of so and so division to the market as sub.
They'll still hold majority of the shares and will have to file 10Ks anyway.

Many people want Microsoft to spinoff the XBOX brand also (I know I do.)

Overall, great for my portfolio, MWAHAHAHAHA
 

Rourkey

Member
Can someone explain this better? Is he basically using his power as one of the big shareholders to demand changes? can he even do that? wouldn't he need other shareholders to do the same?

He could be a lighting rod for disillusioned shareholders to rally around
 

ymmv

Banned
Wikipedia: Vulture capitalist

A vulture capitalist is an investor who used the clauses of the terms of an investment deal in a company to seize ownership of the company or valuable parts of it outright.[1][2] Whereas a venture capitalist invests in a company likely to succeed in the marketplace and hence show a profit to the investor, a vulture capitalist looks to invest in a firm likely to fail to show a profit in the near term, triggering the takeover clauses, resulting in forfeiture of some or all the assets of the company, with an eye towards selling off the constituent parts, hence showing a profit while destroying or hobbling the company/
 

Router

Hopsiah the Kanga-Jew
Would the gaming division been able to stand alone without the support of the rest of sony over the last few years?

I'm pretty sure the rest of Sony was too busy losing money to support one of their only decently profitable arms.
 

vivftp

Member
Kaz seems to be doing a fine job as it is, and he's only been in charge for a year. The whole One Sony philosophy is interesting, but I don't know if we've fully seen it in effect yet. It does take time to design and build products, so I don't know if the products build upon this idea have even seen the light of day yet.
 
I'm pretty sure the rest of Sony was too busy losing money to support one of their only decently profitable arms.

About that...
 
Ok, what most people don't realize here is this:

In a pure, 100% spinoff case, I as a shareholder will receive my interest in the sub/spin-off division as a dividend.
If someone can sell me the idea that "a sony-entertainment inc stock can soar much higher if separated from the rest of Sony's business", it's not exactly a bad bargain.
 

Copenap

Member
Can someone explain this better? Is he basically using his power as one of the big shareholders to demand changes? can he even do that? wouldn't he need other shareholders to do the same?
On his own he can't force anything but he has a large enough share and public voice to be at least heard.

Regarding his demand, it is really not unusual if you have a company that has severe problems in parts of its business to try to seperate these segments so that the good one can flourish without a burden and the bad one can be restructured.
 

Rourkey

Member
But he can't do this on his own, right? cause the way this article is written and the comments here make it sound like it's a fact

A lot of major shareholders are fund managers like himself who are paid to grow their funds, if they think he'll make them more money they'll let him vote on their behalf
 

Slavik81

Member
That's some bravado there. He apparently managed to change things at other companies, so why do you think Sony is different?

Because Sony is a titan of Japanese industry.

Neither Japanese industry nor government like outsiders interfering with their business, and they design their corporations to be resistant against that sort of pressure.

They are much more difficult to change than American businesses.
 

Rhindle

Member
Interesting approach. "This makes money, so let's get rid of it."
More like: Let's split it off into a separate business owned by the same shareholders, so it is not saddled with the burden of the crappy parts of the business and can achieve its full potential value.
 

Tellaerin

Member
That's some bravado there. He apparently managed to change things at other companies, so why do you think Sony is different?

From the article:

Still, even big Japanese investors have often faced resistance in seeking changes at companies, a hurdle that may be significantly higher for a foreign hedge fund manager.

(Emphasis mine.)

I guess this sums up my feelings nicely: http://www.youtube.com/watch?v=_3jc_3p0YZY
 
Because Sony is a titan of Japanese industry.

Neither Japanese industry nor government like outsiders interfering with their business, and they design their corporations to be resistant against that sort of pressure.

They are much more difficult to change than American businesses.

You sound like an expert.
 
More like: Let's split it off into a separate business owned by the same shareholders, so it is not saddled with the burden of the crappy parts of the business and can achieve its full potential value.

Where full potential value means: pay more divident to shareholders, while the crappy parts can go bankrupt, preferably creating debt that is to be payed by regular tax-payers rather than shareholders. Or something like that... ;)
 
Some of you guys are writing this off - but this is a board fight - and Sony should be worried. Loeb will either be bought off (meaning Sony will bleed cash), or they will acquiesce to some of his demands particularly if he forms a block with other shareholders. In any case it takes valuable board and executive time away from focusing on their businesses.

A reference point: P&G missed investing in a few key companies while they were battling Carl Icahn.

Nintendo has less reason to worry since they aren't US-listed (outside of sponsored depository receipts), and there are a smaller number of shareholders holding high concentrations of their stock. But even Nintendo should be worried because their market cap is almost entirely cash meaning they could be the target of a hostile bid, which would consume a lot of time and resources internally.
 

Perkel

Banned
He also wants to sell Sony financial services which is by far most profitable division and very reason why Sony posted profit this year.

He is just playing stocks nothing new here.
 

ymmv

Banned
He also wants to sell Sony financial services which is by far most profitable division and very reason why Sony posted profit this year.

Sony survived the past few years because of their insurance division. If all the profitable divisions are spun off as independent companies, Sony as we know it is dead.
 

Perkel

Banned
Sony survived the past few years because of their insurance division. If all the profitable divisions are spun off as independent companies, Sony as we know it is dead.

I like one liners like that " Sony is dead"

If Sony would drop tv market they would be in much better condition. They are not doing it because they are not in dire situation.
 

antonz

Member
I like one liners like that " Sony is dead"

If Sony would drop tv market they would be in much better condition. They are not doing it because they are not in dire situation.

The only reason Sony turned a profit at all this year was they got into real estate for a short period selling buildings. If in some nightmare scenario this guy made any progress Sony would be dead
 

Slavik81

Member
You sound like an expert.

Well, I'm not an expert, but Japan is famous for its use of cross-holdings, poison pills and other defences against hostile takeovers. Some of those same defences would be effective against activist shareholders.

I can't say much about this particular case, and it's entirely possible that he'll be able to do it. But doing corporate restructuring in Japan is definitely different than America.
 
Top Bottom