Is Sony (SNE) Thinking Change or Being Polite?
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Price: $106.01 --0%
Rating Summary:
11 Buy, 5 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 20 | New: 25
Rating Summary:
11 Buy, 5 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 20 | New: 25
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Yesterday it was learned that Sony's (NYSE: SNE) board is considering spinning the company's entertainment arm, an idea that was proposed by hedge fund manager Daniel Loeb of Third Point. According to reports, Sony's board may have already had discussions, though apparently they will now take a more formal look at Loeb's idea.
Previous comments from Sony suggested it was not open to splitting its businesses, but apparently that is no longer the case. However, despite the market's reaction to the news, many insiders are not holding their breath Sony will untimely decide on a breakup.
Commenting, Sony chief executive Kazuo Hirai said, "We will engage in thorough discussions at the board level to decide on Sony's response. It is an important matter that relates to Sony's core businesses and management, so the board must hold ample discussions."
Hirai stressed that talks are still in early stages, and it remains unclear how serious Sony's board is. Many are wondering if Sony's board is simply being polite to the American. Interestingly, Mr. Loeb hand delivered the proposal to Mr. Hirai, showing his respect for the countries complex culture.
In comments made on May 15th, JPMorgan analyst JJ Park said the recent share price spike was "overblown."
"We also believe that the value of Sony's entertainment and financial arms could significantly increase if they were spun-off. However, the market doesn't account for potential negative value of remaining CE businesses. Hence, recent share price hike on the news appears to be overblown, in our view," said Park.
Goldman Sachs analyst Takashi Watanabe put it this way - "Even if Sony had cash from a hypothetical sale of movies and music, we do not currently see any potential electronics investments that could deliver higher returns. Given this, we believe it would make more sense under present conditions for Sony to keep the entertainment businesses and their potential contributions to operating profits and cash flow."
Sony's stock is higher by 36% in the past 30 day, so clearly many are betting Loeb will be successful. Hopefully, for investors' sake, he will be successful at more than just spurring polite discussions.
Previous comments from Sony suggested it was not open to splitting its businesses, but apparently that is no longer the case. However, despite the market's reaction to the news, many insiders are not holding their breath Sony will untimely decide on a breakup.
Commenting, Sony chief executive Kazuo Hirai said, "We will engage in thorough discussions at the board level to decide on Sony's response. It is an important matter that relates to Sony's core businesses and management, so the board must hold ample discussions."
Hirai stressed that talks are still in early stages, and it remains unclear how serious Sony's board is. Many are wondering if Sony's board is simply being polite to the American. Interestingly, Mr. Loeb hand delivered the proposal to Mr. Hirai, showing his respect for the countries complex culture.
In comments made on May 15th, JPMorgan analyst JJ Park said the recent share price spike was "overblown."
"We also believe that the value of Sony's entertainment and financial arms could significantly increase if they were spun-off. However, the market doesn't account for potential negative value of remaining CE businesses. Hence, recent share price hike on the news appears to be overblown, in our view," said Park.
Goldman Sachs analyst Takashi Watanabe put it this way - "Even if Sony had cash from a hypothetical sale of movies and music, we do not currently see any potential electronics investments that could deliver higher returns. Given this, we believe it would make more sense under present conditions for Sony to keep the entertainment businesses and their potential contributions to operating profits and cash flow."
Sony's stock is higher by 36% in the past 30 day, so clearly many are betting Loeb will be successful. Hopefully, for investors' sake, he will be successful at more than just spurring polite discussions.
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