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Sony turns down spinoff proposal

  |   Aug. 6, 2013 at 6:53 AM
TOKYO, Aug. 6 (UPI) -- Japanese electronics giant Sony said it vetoed a proposal to sell its music and movie divisions as they complement their electronics division.

In late May, billionaire investor Daniel Loeb, who owns 7 percent of Sony, hand delivered a letter to Chief Executive Officer Kazuo Hirai requesting the company spin off its music production and movie studio businesses and concentrate on what has traditionally been the company's bread and butter: electronics.

The Wall Street Journal reported Sony released a letter Tuesday saying content production fit into its business strategy and it had other means for raising capital if it had to do so.

"Should we require capital, or in the event of an unanticipated event, our priority would be to raise it without selling a portion of an asset fundamental to our growth strategy, and without unnecessarily burdening Sony's ability to execute our business strategy for both entertainment and electronics," Hirai wrote.

In response, Loeb's hedge fund Third Point said it "intends to explore further options to create value for Sony shareholders."

Weakening Loeb's argument, Sony has recently shown signs it can become profitable again, the Journal reported.

The company's television business earned a profit in the second quarter. The Xperia Z smartphone is doing well and the PlayStation 4 gaming platform is expected to boost sales this year.

In a letter written in July, Loeb complained a "complete lack of accountability and poor financial controls," had plagued Sony's movie production studio Sony Pictures.

Sony said it disagreed with the characterization.

"Many of your observations regarding our entertainment businesses, and in particular Pictures, are not consistent with the businesses I know," Hirai wrote.

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