Since CEO Kazuo Hirai took the helm at Sony last year, pledging a radical turnaround to rescue the Japanese giant from its deep problems, there has been an increasingly laser-like focus on the activities which Hirai believes can save the firm ‘ mobile, gaming and content, and the multiscreen platforms which could tie all that together. But one shareholder at least ‘ Third Point, one of the largest ‘ wants an even sharper focus. Third Point founder Daniel Loeb, in a letter to Hirai, has called for the break-up of Sony, spinning off the entertainment unit and selling the insurance arm, to accelerate the revival of the core electronics business.
Loeb is not a man to be ignored. Billionaire head of a US hedge fund, he is credited with pushing out former Yahoo CEO Scott Thompson and then poaching Marissa Meyer from Google to take over. Now he is calling for a seat on Sony’s board and the spin-off of the entertainment arm, which includes one of the world’s largest movie studios and music labels, to deliver higher profit margins and support the recovery of the electronics units, which include Sony Mobile.
“While Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” Loeb wrote in the letter to Hirai, as reported by the New York Times. He claims even a partial spin-off could boost Sony’s value by up to 60%. He also wants it to sell its 60% stake in Sony Financial, even though that unit accounted for the bulk of the company’s profit in its most recent quarter (when it reported its first annual profit for five years).
Analysts and investors have been putting the boot into Sony since 2003, when it had a sudden and calamitous dip into fiscal losses, referred to as the Sony Shock. Now, multiple management teams later, it has recorded an annual profit for the year to March 31, its first in five years, and looks in ruthless form to deal with all of its past inadequacies, even without Loeb’s pressures.