Japanese consumer electronics company Sony Corp. (SON.L, SNE) is considering evaluating a proposal to spin off its entertainment business, the Nikkei business daily reported Tuesday.
At a board meeting on Wednesday, Sony will reportedly consider a proposal from its major shareholder, U.S-based hedge fund ThirdPoint LLC, to spin off the movie and music business. ThirdPoint owns a 6.5 percent stake in Sony.
ThirdPoint is said to have urged Sony, the maker of the PlayStation game console, Xperia smartphones and Bravia television sets, to spin off the entertainment business so that the company can use proceeds from the subsequent stock sale to reconstruct its money-losing electronics business.
According to the Nikkei report, Third Point Chief Executive Officer Daniel Loeb met with Sony President and CEO Kazuo Hirai as well as other executives while visiting Japan last week. Loeb proposed that Sony sell as much as 20 percent of its entertainment business, including the company's U.S.-based film and television studio as well as its music business, in an initial public offering.
Loeb reportedly said that he will offer an investment of up to 200 billion yen to support the separate listing and dispatch directors to Sony if requested. Meanwhile, Sony plans to increase smartphone sales to turn the electronics operations to profitability this year.
In early May, Sony said it expects profit and sales to increase in the current year, after reporting an annual profit for the fiscal year ended March 31. For the fiscal year ending March 31, 2014,the company estimates net income to increase 16.2 percent year-over-year to 50 billion yen.
For the just concluded year, net income attributable to Sony's stockholders was 43.03 billion yen, compared to loss of 456.66 billion yen in the previous year. Full-year sales and operating revenue advanced 5 percent to 6.80 trillion yen from 6.49 trillion yen in the prior year.
However, the company recorded a decrease in unit sales of key electronics products. Meanwhile, pictures sales for the year increased 11 percent to 732.7 billion yen. The division received significantly higher theatrical revenues from the current year's film slate including Skyfall and The Amazing Spider-Man.
SNE closed Tuesday's regular trading session at $22.91, up $1.94 or 9.25 percent on a volume of 22.42 million shares.
For comments and feedback: editorial@rttnews.com