Investors are calling on Sony to divest its semiconductors, sell its finances and concentrate on being an entertainment giant.

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 Investors are calling on Sony to divest its semiconductors, sell its finances and concentrate on being an entertainment giant.


Netease Technologies News, June 14, Reuters reported Thursday that ThirdPoint, a hedge fund owned by Daniel Loeb, a well-known radical investor, called on Sony to divest its semiconductor business and sell its shares in Sony Financial and other sectors in order to become a leading entertainment giant in the world.

This is the second time in six years that Leeb has targeted the Japanese electronics manufacturer. Reuters reported in April that ThirdPoint had previously targeted Sony for the first time. In a letter to investors, ThirdPoint said the fund currently holds Sony shares worth $1.5 billion.

In a 102-page report, the New York-based hedge fund said Sonys undervalued share price was partly due to its complex structure and urged management to take bold action to streamline it. Leeb said that the semiconductor sector was often seen by investors as an afterthought and should be split into a Japanese listed company called Sony Technologies.

In his letter, Leeb told investors that although Japan was a pioneer in the semiconductor industry, other Asian countries had already eaten into Japans market share, even though Sony had retained its market share. He said New Sony would become a leader in creative entertainment in games, music, movies and electronic products.

ThirdPoint wrote that Sony should also consider selling shares in Sony Financial Holdings, M3, Olympus and Spotify Technology SA. By selling these shares, Sony can significantly reduce structural complexity, which has always been a major negative factor affecting the companys valuation. Sony declined to comment.

Leeb expressed support for Kenichiro Yoshida, Sonys chief executive, saying he could turn his attention to unlocking asset values to create a stronger Sony.

So far, the relationship between ThirdPoint and Sony has been very friendly, and the two sides met in New York last week. Leeb and several colleagues discussed the hedge funds ideas with Sony executives, including Kenichiro Yoshida.

For weeks, rumors abound about what Leeb might want Sony to do and how Sony would respond. So far, however, Sony has not responded to ThirdPoints proposal.

When Leeb first approached Sony in 2013, he set up a position of about $1 billion and personally wrote a letter to Kazuo Hirai, Sonys chief executive, calling on the company to divest its entertainment sector. He also publicly stated that his investment had yielded a 20% return and regretted missing out on greater returns.

Six years later, Mr. Hirai resigned as chief executive of Sony, and many tax laws in Japan have changed, making it more attractive for companies to divest businesses that may not be well suited.

Leebs return to Japan coincides with a new wave of rights protection in Japan. Investors such as ValueAct, KingStreet Capital Management and FirTree Partners are pushing for reforms in Olympus, Toshiba and Kyushu Railway Company. Japanese companies accustomed to traditional business models are often reluctant to yield to investor pressure. However, Loebs challenges usually succeed. Last year, he tried to overthrow the entire board of the U.S. food company Campbell Soup, which eventually won two board seats despite the fact that members of its founding family controlled most of its shares. ThirdPoint returned 9% in the first quarter of 2019, largely thanks to Nestles earnings. In 2018, the hedge fund publicly criticized Nestle for its strategic chaos. Source of this article: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541

Leebs return to Japan coincides with a new wave of rights protection in Japan. Investors such as ValueAct, KingStreet Capital Management and FirTree Partners are pushing for reforms in Olympus, Toshiba and Kyushu Railway Company.

Japanese companies accustomed to traditional business models are often reluctant to yield to investor pressure. However, Loebs challenges usually succeed. Last year, he tried to overthrow the entire board of the U.S. food company Campbell Soup, which eventually won two board seats despite the fact that members of its founding family controlled most of its shares.

ThirdPoint returned 9% in the first quarter of 2019, largely thanks to Nestles earnings. In 2018, the hedge fund publicly criticized Nestle for its strategic chaos. (Small)