| TOKYO, June 19
TOKYO, June 19 Sony Corp's top investor
Daniel Loeb will miss its shareholder meeting on Thursday and
those attending will not be considering his proposal to
partially spin off the lucrative entertainment business, sources
familiar with the matter said.
But his suggestion, which strikes at the heart of whether
Sony remains both a consumer electronics maker and a provider of
music, movies and TV programmes, will be the elephant in the
room at the annual gathering - and for months to come.
Loeb, who heads New York-based hedge fund Third Point, wants
Sony to spin off as much as one-fifth of the electronics
empire's profitable entertainment unit and use the proceeds to
strengthen its struggling hardware division.
The sources gave no reason why he would miss the annual
meeting. But he is expected to continue pressing his case with
Sony's board and, if no action is taken, will have the right as
a major shareholder to eventually call an extraordinary
Sony's strategy to merge content and hardware in a unified
company, which kicked off 24 years ago with the purchase of
Columbia Pictures, has failed to deliver the synergies it
promised, Loeb argued this week in his second letter addressed
to Sony CEO Kazuo Hirai.
Loeb's call to awaken Sony's "sleeping giant" - an
entertainment business that generates 37 percent of its
operating profit with popular artists such as Beyonce and hit
franchises like "Spider Man" - may be compelling for
shareholders but the company board is unlikely to reach a
decision quickly, analysts have said.
With his proposal, Loeb is trying to repeat his success last
year at Yahoo Inc, which he took on in a lengthy and
eventually bitter proxy fight that triggered a boardroom
Tokyo-based Sony, with a market capitalisation of $21
billion, has long been a pillar of Japan Inc and a pioneer in
the electronics industry. But it has lost market share - and its
innovative edge - to aggressive rivals such as South Korea's
Samsung Electronics Co Ltd and Apple Inc as
they churn out blockbuster products.
Highlighting the challenge to reviving consumer electronics
as a profit centre, Sony in May scaled down its sales targets
for digital cameras and PCs for the year to end-March 2015 and
chopped the operating profit margin goal for the PlayStation
game business for that year to 2 percent from 8 percent.
"Fundamentally, the problem is what to do with the
electronics division," said Mitsushige Akino, chief fund manager
for Ichiyoshi Investment Management in Tokyo.
"If they don't strengthen that, there's no point. So the
hedge fund's suggestion is one way to do that."
Adding pressure on Sony to consider his proposals, Loeb's
$13 billion fund said this week it increased its stake in Sony
to 70 million shares, or about 7 percent.
With Third Point's suggestions off the agenda for Thursday's
meeting, shareholders instead will be considering relatively
non-controversial management changes including former Sony CEO
Howard Stringer's retirement from the largely ceremonial post of
chairman of the board.
Annual shareholders' meetings in Japan are typically
dominated by questions from individual investors, often airing
grievances about company management but rarely leading to
changes in management policy or strategy.
It is still unclear how much support Loeb's plan might win
among major Sony shareholders. So far, none has come out either
in favour or opposed.
Sony shares are up more than 7 percent since Loeb sent his
first letter to Hirai with his proposals on May 14. They surged
to a two-year high of 2,300 yen in the week that followed the
proposals, boosted by a media report that said Sony was