Possible Sony Breakup to Focus on Electronics

[Helen B]

Sony's stock price has risen about 11% so far today after this letter (link)

 

[KmH]

Time will tell the tale.

 

[amolitor]

It's actually a pretty generic plan.

"You guys should spin off this one profitable division, and then, like, FOCUS MORE on the other parts"

isn't much of a plan.

They probably want a pretty radical restructuring that dumps everything that's not looking to make a profit in the next quarter or two, and divides the thing up into less of a monolithic thing and more of a bunch of separate pieces. This pretty much always makes the stock go up. Whether it obliterates or saves the company itself in the end depends on a lot of stuff, and usually isn't of all that much interest to these hedge fund guys. The way hedge funds work, they're really not set up to care much about long term health of the target companies.

The stock went up, basically, because the market sees that Third Point is likely to force Sony to do some stuff that will.. make the stock go up.

 

[amolitor]

Actually, now that I look at it more carefully, it looks as if Third Point would actually like Sony to spin out Sony Entertainment, and give that company to Third Point. There's some stuff about issuing stock, but giving existing shareholders (i.e. Third Point) dibs on that stock. I think Third Point would like to convert their shares of Sony stock into shares of to-be-issued Sony Entertainment stock.

That would explain why their plan for the electronics side is to "Focus", that's just a red herring. They don't care about the electronics side of the house at all, they want the movie business.