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American Investor Wants To Break Up Sony

Kaz has other plans.

Daniel S. Loeb, an American hedge fund billionaire with a 6.5% stake in Sony has strongly suggested that Sony is broken up into small companies, specifically breaking off the entertainment division that includes Sony Music, the Hollywood studio and of course, PlayStation.

In a letter to Kaz Hirai he said that his hedge fund, Third Point, broadly supported Sony’s current plans but “we also believe that to succeed, Sony must focus.” According to Loeb, the entertainment division requires “discipline” to bolster the share price by up to 60%.

A spokesman for Sony responded to the move with a polite but firm statement reinforcing their current plans.

“We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial services businesses.”

“We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy.”

Shareholders seem to have reacted positively to Loeb’s plans which would require Sony to ditch its strict hierarchy and bureaucracy, something that is entrenched in Japanese culture.

This has always been a problem, Sony’s own Howard Stringer has also suggested that the Japanese culture has a negative impact on running a profitable business.

“Japan is a harmonious society which cherishes its social values, including full employment,” he said, “That leads to conflicts in a world where shareholder value call for ever greater efficiency.”

To put it simply, Mr. Loeb wants Sony to be run like a western company so as to maximise profits.

For PlayStation this would almost certainly mean the streamlining of the games division and any plans for smaller, quirkier games in the style of Unfinished Swan, Journey and Tokyo Jungle would be cancelled in favour of products that are guaranteed to make money.

At present Sony seem to be resistant to change, Kaz Hirai has always said that Sony Entertainment is not for sale and a will give a presentation on the company’s future plans next week.

An American trying to force Sony to abandon hundreds of years of tradition and culture appears to be an insurmountable task but Sony do need to start making money. If the current plans to bring the company back in to profit falter at any step, Daniel.S. Loeb and Third Point are now in a prime position to make their move.

Source: NY Times.

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21 Comments
  1. JR.
    Member
    Since: Apr 2013

    Death List Five
    1. Mr Loeb
    2. …

    Comment posted on 14/05/2013 at 10:40.
  2. ClubberLang
    Member
    Since: Jul 2010

    “Japan is a harmonious society which cherishes its social values, including full employment,” he said, “That leads to conflicts in a world where shareholder value call for ever greater efficiency.”

    That just shows you how fucked we are when “a harmonious society which cherishes its social values” is considered a negative trait.

    Comment posted on 14/05/2013 at 10:42.
    • Tuffcub
      On the naughty step.
      Since: Dec 2008

      Money > Being Nice

      Comment posted on 14/05/2013 at 11:40.
  3. Bodachi
    Member
    Since: Jan 2010

    So less of the great downloadable titles that I really enjoyed. Yeah I’ll be having none of that. Those very titles are why I still play on my PS3.

    Comment posted on 14/05/2013 at 10:46.
  4. Peter Chapman
    Team TSA: Editor
    Since: Forever

    This is two different ideas for how to make the business viable again and there’s no way to know for sure which (or even if either) would ultimately be successful. But, having said that, here’s a question: If you knew the move would secure PlayStation so that it could continue into another generation – a PlayStation 5 – would you mind if it was no longer a part of Sony?

    Comment posted on 14/05/2013 at 11:01.
    • Moshbag
      Member
      Since: Nov 2011

      Not one tiny little bit.

      Comment posted on 14/05/2013 at 11:53.
    • KeRaSh
      Member
      Since: Nov 2009

      If it’s really just a new name, then I wouldn’t mind at all. In my mind Sony the console manufacturer and Sony the TV company are two different entities.
      Isn’t the Playstation division one of the few divisions that are actually profitable these days? If anything I’d say Sony’s console business would benefit from a split. They wouldn’d be held back by all the other divisions. On the other hand, I don’t know how much the Playstation brand depends on the other divisions when it comes to licenses, R&D and whatnot.
      It’s not easy to make a reasonable assessment of all the internal bits that we outsiders don’t know about.

      Comment posted on 14/05/2013 at 12:01.
    • bmg_123
      Member
      Since: Feb 2012

      I would mind because I think a lot of Sony goes into Playstation, from the design philosophy, the support of smaller games and value. If some other company took it over I can only see a detrimental effect on the brand; sure, it might sell more but in the end what makes Playstation appealing to me is the use of it’s heritage and the games, I can just imagine another company exploiting it through greed and making the PSN more like XBL or something.

      Comment posted on 14/05/2013 at 12:33.
    • JR.
      Member
      Since: Apr 2013

      Do I want Playstation 5? Of course. But do I want it at the expense of taking risks and innovation? Where games are ‘cancelled in favour of products that are guaranteed to make money.’

      No I do not.

      Comment posted on 14/05/2013 at 12:39.
    • Tuffcub
      On the naughty step.
      Since: Dec 2008

      If the yanks took over, PlayStation would “Activisionised” – anything remotely risky would never get made. No Heavy Rain, no Flower, etc. The indies would be shown the door – bye bye Thomas – and profits would be the only concern.

      Someone at Sony still has a sense of wonder, the balls to take a risk now and then and that’s what sets PlayStation apart from other consoles.

      Replace that with dollar signs and it becomes the same as every other console.

      Comment posted on 14/05/2013 at 12:50.
      • KeRaSh
        Member
        Since: Nov 2009

        Why only think black and white? If they split but kept all the employees (no sale to an outside company) and their philosophy it would be a much more subtle change. Why would they suddenly stop pushing small and quirky games?

        Comment posted on 14/05/2013 at 14:11.
      • rht992
        Member
        Since: Apr 2009

        That is a fine idea but compared to most consoles Sony do tend to push the boat out and bring new ideas to a larger audience. Anything that manages that is doing something right so why risk change? If its not broke, don’t fix it.

        Comment posted on 14/05/2013 at 21:36.
  5. DividSmythe
    Member
    Since: May 2012

    Stay the same Sony ignore this stupid man. Just return to profit.

    Comment posted on 14/05/2013 at 11:40.
  6. bigkingy
    Member
    Since: Jul 2010

    So, let’s get this straight. A billionaire wants Sony to simplify ,eg lay off hard working people so he can make even more return on his shares. What a world we live in.

    Comment posted on 14/05/2013 at 12:15.
  7. Bilbo_bobbins
    Member
    Since: Jun 2009

    oh look an investor wants more money and is trying it on. Nob !

    Comment posted on 14/05/2013 at 15:11.
  8. skibadee
    Member
    Since: Oct 2009

    on another note there stock has jumped big time over the last few days go Sony.

    Comment posted on 14/05/2013 at 15:17.
    • Peter Chapman
      Team TSA: Editor
      Since: Forever

      yeah, their stock jumped largely because of this guy’s suggestion and the notion that there might be some sort of buy up by his investment group to increase their stake. It’ll likely drop off again (back to normal) now Sony has bristled at the public suggestion.

      Comment posted on 14/05/2013 at 16:38.
  9. SH Number 7/Mini-Lipscombe
    Member
    Since: May 2011

    I’m not a Playstation owner nor am I a massive fan of Sony, but I don’t agree at all. Japans businesses are made on respect, loyalty and morals. Wasn’t it not so long ago that the Sony higher ups gave up their bonuses since they hadn’t made the company any profit? A friend (who had lived in Asia for a while) and I were discussing the Japanese business structure the other day saying how good it was. It might not be the most profitable way but I think that every company should be like this and that the Western countries should learn from the East about how to run a company and that every member is respected.

    Comment posted on 14/05/2013 at 15:37.
    • Peter Chapman
      Team TSA: Editor
      Since: Forever

      It’s remnants of Bushido code, isn’t it? Honour and responsibility, that kind of thing. Much nicer than western capitalism or Chinese economic slavery but far less profitable, unfortunately.

      Comment posted on 14/05/2013 at 16:40.
    • rht992
      Member
      Since: Apr 2009

      Too many Companies are focused on profit when they should work on maintaining and continuing stable income rather than being obsessed with the idea of a few extra digits.

      Comment posted on 14/05/2013 at 21:30.
  10. rht992
    Member
    Since: Apr 2009

    Totally understandable the Share Holders would want to maximise profit but, either in Japan or the west, a few making money at the expense of others losing employment is simple wrong.
    Let Sony continue their plans and certainly don’t throw this into the mix when the PS4 is launch already in motion.

    Comment posted on 14/05/2013 at 21:27.

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