Hedge Fund Plan Rejected By Sony Corporation

Hedge Fund Plan Rejected By Sony Corporation

Kazuo Hirai, the CEO and President of Sony Corporation, told Daniel Loeb that the company will not split its entertainment division, as suggested by the founder of Third Point hedge fund. Hirai indicated that the board of directors unanimously rejected the plan. The company intends to maintain ownership of 100 percent of its entertainment business.

Loeb advised Hirai last May to sell fifteen to twenty percent of the entertainment division of the company. Loeb owns around seven percent of Sony. He indicated that he is willing to accept a seat on the board of the company.

The entertainment division of Sony Corporation includes Sony Music and Sony Pictures. Loeb indicated that the company was not successful in running the entertainment division of the company. He indicated that the entertainment unit of the company did not have the accountability and discipline of its competitors.

Hirai indicated that the initial public offering suggested by the hedge fund was not consistent with the profitability strategy of the company. He added that there is an increasing demand for content, and full control of the division will be advantageous for the internal collaboration and flexibility of the company.

The letter of Hirai to the hedge fund revealed that numerous changes were implemented during his term as CEO, and the company is confident that it is on the right path. The entertainment business of Sony Corporation is essential in its corporate strategy. It is also plays a significant role in the growth of the company. He is committed in ensuring the growth and profitability of the company. He also aims to leverage its partnership with the electronics and service divisions of the company. The company is determined to enhance profitability and value for its shareholders in order to meet and surpass expectations of all company stakeholders.

The company reported a solid first quarter, which allowed the company to generate revenues of $17.3 billion. This is a thirteen percent increase compared to the same period a year ago. The company also reported $35 million in profits in contrast to a net loss in the same period a year ago.

Despite the profit, most of the business of Sony Corporation experienced a below par quarter, with operating profits decreasing during the period.

However, Sony Corporation remains steadfast in resisting a split as suggested by the hedge fund.

Posted by James Fried on Wednesday August 07 2013, 4:55 AM EST. Ref: CNET. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0