Sony to discuss investor Daniel Loeb's spin-off plan
Sony has said it will consider a proposal from one of its biggest shareholders that it should spin off up to 20% of its entertainment business.
The idea came from Daniel Loeb, founder of US hedge fund Third Point, who put forward the idea in a letter to Sony president Kazuo Hirai. He said Sony should use the cash to boost its ailing electronics arm. Mr Hirai told journalists on Wednesday that Sony's board would discuss Mr Loeb's proposal, but gave no timetable. Following the news, Sony's shares rose 5.9% in Wednesday trading in Tokyo. Sony had initially said that its entertainment division was not for sale. But when asked about the proposal at a news briefing, Mr Hirai said the board would give it "thorough consideration" before replying to Mr Loeb. Sony also announced that it was cutting its sales targets for cameras, smartphones and tablets, but Mr Hirai said there were "encouraging signs" of improvement in its electronics business. Earlier this month, Sony reported its first annual profit for five years, but its results were boosted by asset sales and a weakening yen. Its electronics business has continued to struggle, particularly its TV division, which has been loss-making for the past eight years. Third Point holds a 6.5% stake in Sony. 'Burdensome debt' Mr Loeb's letter, which was published in the New York Times last week, described Sony's entertainment business as a "hidden gem". Its music label houses artists such as Taylor Swift, Beyonce and Adele, while its film studio is one of the biggest in Hollywood and was behind the latest James Bond film, Skyfall. "To maximise Sony's overall success, we believe the company should change the structure of its ownership of Sony Entertainment," Mr Loeb wrote. "Doing so will strengthen Sony by reducing its burdensome debt, thereby providing additional resources and capital to focus on revitalising the resurgent Sony Electronics." Mr Loeb made headlines last year when he lobbied for the dismissal of Yahoo chief executive Scott Thompson after discovering that he did not have the computer science degree that he claimed to hold. Mr Thompson eventually quit the company and was replaced by Marissa Mayer. Outspoken shareholders like Mr Loeb are relatively rare in Japan. Shareholder meetings do not normally see company agendas challenged. But the country is currently seeing more interest from global investors as Prime Minister Shinzo Abe, elected last year, has promoted easy money policies designed to boost economic growth and attract private investment.