Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb’s activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.
“Dan Loeb’s activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares”
– according to Reuters report
It is not the first time Dan Loeb targets Sony
Dan Loeb’s hedge fund Third Point has targeted Sony the second time in six years. Dan Loeb’sThird Point is pushing Sony to consider certain strategic options for some of its business segment. Dan Loeb believes that Sony’s movie studio has garnered takeover interest from the likes of Amazon and Netflix, sources familiar with the situation told Reuters.
During Dan Loeb’s 2013 battle against Sony, the manager was particularly critical of its entertainment segment, which he deemed “poorly managed.”
Dan Loeb targets the electronics maker, Sony as a potential takeover target
Dan Loeb, the billionaire activist investor has for months been persuading Sony to spin off the entertainment unit as the Japanese company struggled against more innovative competitors.
But Sony’s board doesn’t want to sell-off parts of the business. Sony has rejected Dan Loeb’s call for a spin-off, saying in a letter that the board and management team “strongly believe that continuing to own 100 percent of the company’s entertainment business is fundamental to Sony’s success”.
“continuing to own 100 percent of the company’s entertainment business is fundamental to Sony’s success”
Sony woes make the consumer electronics vulnerable to a takeover which could be the main reason why Dan Loeb targets Sony
Sony was once a market leader in consumer electronics, but recently the consumer electronics was in the midst of a turnaround effort spearheaded by Kenichiro Yoshida, its chief executive who formerly served as its chief financial officer.
Why are the sharks circling Sony?
The maker of the iconic Walkman and Trinitron TV fell behind the likes of Apple Inc. in innovation after the release of the iPod in 2001 and the iPhone in 2007. Sony over the past decade has reinvented itself as an entertainment company with stable revenue from music content and its video game platform.
“We’ll make this a year of biting the bullet on restructuring” –
Kenichiro Yoshida, Sony’s CFO
Dan Loeb targets Sony for its gaming business, popular PlayStation 4
Investors are somewhat optimistic about Sony’s gaming business. But some analysts argue that Sony’s gaming business shows signs of slowing, with its popular PlayStation 4 console nearing the end of its cycle.
Moreover, Sony’s gaming business has seen its fortunes eroded in recent years by competitors such as Samsung and Apple and now expects to post of a loss of 50 billion yen (roughly $489.5M) in the current fiscal year, according to Reuters reports.
Sony is wagering its future on a successful restructuring
“We’ll make this a year of biting the bullet on restructuring” Sony’s CFO Kenichiro Yoshida is quoted as saying. “In previous years the restructuring was mostly within business units and in manufacturing,” Yoshida reportedly said. This time the difference is that we are quitting businesses entirely”.
Dan Loeb targets Sony during a period in which the iconic Walkman creator has decided to cease a number of its non-profitable activities
In 2014 Sony agreed to sell its PC business. Sony sold its Vaio business to an investment fund, cut 5000 jobs and revised its full-year forecast from a profit to a loss of $1.1 billion. Sony also decided to spin off its TV business.
Sony “has determined that concentrating its mobile product lineup on smartphones and tablets and transferring its PC business to a new company established by [Japan Industrial Partners] is the optimal solution,” Sony said.
The company’s money-losing PC business has a staff of about 1,000.
Sony has also decided to stop production of commercial OLED TVs, to focus on 4K panels.
Sony also recently issued a profit warning blaming shrinking demand for disc-based media, and unexpected costs associated with its withdrawal from the PC business.
Sony reported a record $489M loss in 2014.
“Sony’s shares rose more than 8 percent in Tokyo on news that Dan Loeb targets Sony”
Dan Loeb targets Sony at a time when the company is a classic casualty of disruptive technologies
Who would have thought just two decades ago that mobile phones would be multi functional? Today an iPhone is a digital camera, video camera, a stereo system, navigation systems, audio recorder, a planner and provides mobile internet access on the go.
Dan Loeb targets Sony but the consumer electronics could be Japan’s Kodak
What then is Dan Loeb’s end game? Dan Loeb already has a 6% stake in Sony which makes him the Japanese company’s largest shareholder.
Dan Loeb third Point wants Sony to explore options for some of its business units, including its movie studio, which the hedge fund believes has attracted takeover interest from the likes of Amazon.com Inc. and Netflix Inc.
Perhaps Dan Loeb targets Sony as an activist investor or better put as an asset stripper
As Professor Nuno Fernandes writes “beware of activist investors”.
Third Point last exited a stake in Sony in 2014 with a roughly 20 percent gain after spending a year and a half pushing for Sony to spin off its entertainment division, writing in a letter to investors that the division “remains poorly managed”.
Later Dan Loeb changed his tune, praising the company for cutting costs at the entertainment division and having made management changes.
Sony’s shares rose more than 8 percent in Tokyo on news that Dan Loeb targets Sony.