Daniel S. Loeb, a billionaire hedge fund manager on Wall street, advises Sony to spin off some of its holdings in order to focus on the core electronics business.
Daniel S. Loeb is a major Wall street investor with a lot of interest in Sony. His Third Point fund owns 6.5% of the company; one of the largest stakes. Now he's pushing for Sony to refocus its efforts by selling off parts of Sony Entertainment, the company's movie and music business, as well as Sony's 60% stake in Sony Financial, which includes a profitable insurance business. Loeb's advice came personally delivered to CEO Kaz Hirai in the form of a letter.
Daniel S. Loeb
Loeb is well known for making bold moves. He blew the whistle on former Yahoo CEO Scott Thompson's false claims of having a computer science degree, and lured Yahoo's current CEO away from her role at Google. Since Hirai took over for Sony, he has been trying to streamline the company, focusing its efforts on gaming, imaging and medical instruments, ultimately leading to Sony's first profit in five years. Being typically bold however, Loeb is moving for a much more aggressive streamlining, and believes that a partial sale would boost Sony's shares by 60%. “While Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” writes Loeb.
Loeb believes that Sony Entertainment is the company's hidden gem, and giving shareholders a crack at its shares for the first time would be of great benefit. However, with Sony Entertainment perhaps making up as much as 40% of the company, Sony's board is not enthusiastic about the proposal. Reuters reports that the company has replied to the letter, stating that it's entertainment businesses are important for growth and are not for sale.