Ben-DutkaBillionaire hedge fund investor Daniel S. Loeb wanted Sony to split their business, and make their entertainment division (which includes the PlayStation brand, of course) a wholly separate endeavor.
But after some consideration, the electronics giant has opted to reject Loeb's proposal. In a lengthy letter to Loeb's Third Point LLC firm, Sony explained why continuing to own 100% of the entertainment business is "fundamental" to the corporation's success.
They gave numerous reasons: Firstly, Sony believes that Third Point's plan for an initial public offering of Sony's entertainment ventures is "not consistent with the company's strategy for achieving sustained growth in profitability and shareholder value." They also said that with increased demand of entertainment content, their business will "increasingly benefit from these trends" and that the shareholders will benefit as well. Sony further said they need full control of their entertainment branch because that "drives internal collaboration, facilitates synergies, and allows the company to be more nimble."
Said Sony CEO and president Kaz Hirai:
"We are encouraged by our progress as we continue to execute on our One Sony strategy," Sony CEO and president Kazuo Hirai said in a statement. "We have made many changes during my tenure as CEO, and we are confident that we are on the right path.
Sony's entertainment businesses are critical to our corporate strategy and will be important drivers of growth, and I am firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses. We are determined to pursue sustained growth in profitability and shareholder value, so that we can meet and exceed the expectations of all of our stakeholders."
Well, guess Loeb will just have to be happy with owning 6% of Sony. It's worth about $1.1 billion so no soup lines in his future.
"We have made many changes during my tenure as CEO, and we are confident that we are on the right path …with this new exclusive God of War title for PS Vita !"
That's good news for gamers, if we got split off into a profit machine all Sony devs would go mega CoD-like mainstream over night.
I just pictured a whole bunch of Sony exclusives with a coat of CoD added to them.
This is good for gamers and Sony. This woukd have been catastrophic for the Playstation.
I'm nt so sure about that. The Playstation/gaming division is one of the few in Sony that makes money.
As it is now they need to help support the divisions that don't go as well. Had they been separated they could have used those founds for the platform instead.
I'd rather say it would have been catastrophic for the TV department – they are loosing money like crazy nowadays.
Last edited by Beamboom on 8/6/2013 3:15:46 PM
The gaming segment is healthy but without the elbow room provided by Sonys other assets would they be able to take many risks? Gaming is so fickle now. Any of the players can fall of from one gen to the next. Unlikely but not impossible.
I was hoping they did not break apart. It would have began an end to Sony in my opinion.
Beam, Sony has been consistently paying out dividends to shareholders. The stock price goes down in years when they don't make as much money, but investments continue to come in because people who buy when shares are low can afford to buy more shares, thus receiving a greater dividend and a much larger net worth for when the company eventually does well.
As long as a company pays out dividends, it's doing ok. And as long as it continues to trade publicly while not being anywhere close to bankruptcy, you're safe.
People have a habit of looking at net profits as an indicator of success. While a positive profit margin is a good thing, obviously, well established companies can afford to lose money for a number of years before having to be genuinely concerned. Also, technology companies are almost guaranteed to go up and down. Even Apple has it's highs and lows.
The last thing to do is split your company up into the money making ones and the money losing ones. That's a great way to tank your shares, guarantee you pay out no dividends, garner little to no growth, and piss off your shareholders. To even accomplish a split, the company would have to buy back millions of shares to justify the shareholder's value. And all the little DRiP and SPP guys (like me), that collectively make up a huge part of the market, would run away screaming and stop their automatic investments… holding onto the tiny valued shares we already have, praying that the price goes up to normal so we can justify selling. (DRiP and SPP guys don't care so much about stock price. They just want consistent dividends, no matter how large or small)
I don't see how Sony could have accomplished a split successfully in the long term. It would only have helped them for a year or two as they justify their reduced stock outside of gaming as "it's only because of the split. Sit tight it'll get better" and it would encourage new investors in the gaming division before the PS4, causing an influx of cash flow to help with whatever they need for the first couple years of the launch. But long term, that influx of worth would even out, and the company at large would have less influence on the market.
I think it was a good idea. Not to split.
Last edited by Underdog15 on 8/6/2013 8:26:03 PM
Underdog, I never said they're not safe or anything like that.
What I am saying is merely that the Playstation division (whatever that's named, I can't recall now) is one of the most profitable divisions within Sony, while the TV business is where they struggle the most with losses in several years in a row now. So if Sony were to split up, *thats* the department that should worry, not the Playstation leg.
Kaz was like in Japan when things look bad we stick together. So you ameriCAN just sit back at let me take the wheel.
Loeb should of kept that about 1.1 billion, that's what I would of done.
Last edited by AcHiLLiA on 8/6/2013 3:58:49 PM
Haha yeah me too – and go buy a bungalow somewhere in Cyprus or something and just chill with a grin on my face.
Loyalty or team players, name it how you like. They are compromised with their ideas and goals as a team. It was a very risky idea, so good choice in my opinion.
With all the slippery slopes Sony has been on for so long, whether unwittingly or self inflicted this stance has earned much respect. Sony knows that industry is changing. Not just the Gaming Industry but Industry as a whole. They have assets in The Music, Movies, Games and Electronic Industries. Once they figure out the Rubicks Cube that is the Sony conglomeration they will flourish.
Last edited by FatherSun on 8/6/2013 6:58:10 PM
tea i don't think i wud have been a gud idea but i'm glad it didn't happen i cud have ruined the gaming part like you said.
happy gaming =)