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Sony to consider spinning off its entertainment division

post #1 of 24
Thread Starter 
Japanese electronics and entertainment conglomerate Sony could drop one of those divisions in the near future, as the company's board will soon discuss spinning off its entertainment division in order to help its electronics arm better compete against Apple and Samsung.

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The news that Sony's entertainment division could soon be spun off emerged on Wednesday, when Sony CEO Kazuo Hirai revealed that the board would consider a proposal put forward by U.S. hedge fund manager Daniel Loeb, who runs Third Point LLC. Loeb suggested last week that Sony sell off or spin off its entertainment division ? which includes movies, music, and television ? in order to shore up its electronics manufacturing unit.

Under Loeb's proposal, Sony would sell off 15 to 20 percent of its entertainment business in a public offering that would result in a separately listed company.

"This will be deliberated by the board," Hirai told reporters, according to Reuters. "We have only just begun to study this."

Hirai hinted that, if Sony were to go through with any similar plan, it would likely result in the entertainment business being made public, but not in the unit functioning as a separate entity.

Sony's entertainment arm ? which includes the James Bond film franchise, the world's largest music publishing library, and shows like "Breaking Bad" ? pulled in $862 million in operating profit last year, nearly as much as its consumer electronics division lost. The division was Sony's second-largest source of earnings.

Since taking over as CEO in February of last year, Hirai has sought to implement a turnaround plan for the Japanese giant. Hirai's scheme ? the "One Sony" plan ? consists largely of narrowing the giant's focus to a few areas: digital imaging, gaming, and mobile.

In the gaming segment, Sony is coming off a a third-place finish in the home console race and continues to struggle in the portable console fight. The company hopes to turn around at least its home console fortunes by releasing a PlayStation 4 that is easier to program for. That console will compete with Microsoft's Xbox One, the follow-up to the Xbox 360.

To shore up its PlayStation Vita portable console, which lags behind both Nintendo's 3DS and mobile devices, the company is dropping developer fees in the hopes that game makers will take notice.

In the mobile sector, Sony may have an even more difficult road ahead of it. Once a major player in the mobile phone segment, Sony has struggled to have an impact in the smartphone era.

In April of 2012, the company spent $1.4 billion to take full control of its mobile business from erstwhile partner Ericsson. Its mobile division, though, has seen continual losses as Apple and Samsung grab up all the profit in the segment. Sony's most recent offerings ? Android-powered tablets and smartphones under its Xperia line ? have received warm critical reception, but have seen little traction in the consumer market.
post #2 of 24
mmmm... I wonder if that might be of interest to Apple?
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post #3 of 24

Idea: Apple and MS get together and buy it.

post #4 of 24

I think Apple buying it would be a profound mistake. Not least of which is that it seems that Sony it looking at unraveling the conglomeration and diversification that has led to a loss of focus and the diminishing of a once great brand.

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post #5 of 24
Too late.
post #6 of 24
It's not for sale, guys. It'll be spun off, as a separate public entity, but still controlled by Sony.
post #7 of 24

ah, this is the beginning of the end for Sony.

 

essentially, first it will be split into two companies, with current stockholders receiving shares of the new spin off entertainment company too, along with some new investors buying in. sounds great. the new company makes money! new capital is raised! its shares should grow in value.

 

but the old company - the classic Sony consumer electronics OEM - will continue to bleed with large annual loses. it ain't ever coming back. so at some point in several years it will "merge" with some other Asian OEM in a deal for its now separated stock. essentially, it will be sold cheap.

 

the brand name may survive, but the product lines will be cut back drastically and it will just be a subsidiary. until ultimately even that is liquidated and the buyer takes over all its design/production in-house.

 

how soon? 5-10 years.

post #8 of 24
Quote:
Originally Posted by MattBookAir View Post

It's not for sale, guys. It'll be spun off, as a separate public entity, but still controlled by Sony.

If the new spun off company is a public entity it is always for sale then and what cleaner way to prepare for a sale ... just musing ...
Edited by digitalclips - 5/22/13 at 8:44am
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post #9 of 24
Quote:
Originally Posted by digitalclips View Post


If the new spun off company is a public entity it is always for sale then and what cleaner way to prepare for a sale ... just musing ...

Exactly, once spun out, make it a lot easier to sell it.

 

Yeah it maybe a good idea for Apple to buy it, but I would imagine Apple does not want to be pulled into the content ownership mess. It would be better to have Apple to work with a partner who favors Apple's business model, can anyone say Disney.

post #10 of 24
Thirty years ago Sony meant something in the audio equipment world. It is interesting that it is rare for me to see any dedicated audio equipment in anybodies house these days. I've got an old receiver and power amp that I never use. All of my audio comes from quality computer speakers. Anything bigger would be too loud in my apartment. Wal-Mart doesn't sell Sony TVs anymore. That must hurt.

Alfiejr has it right, except for the publicly traded part not being for sale. The world fluctuates. Things change. When Apple is totally dedicated to tablets and phones and doesn't make computers anymore, something new might be invented by another company that takes the world by storm and Apple could follow in Sony's footsteps.
post #11 of 24
Quote:
Originally Posted by Smallwheels View Post

<..>
Alfiejr has it right, except for the publicly traded part not being for sale. The world fluctuates. Things change. When Apple is totally dedicated to tablets and phones and doesn't make computers anymore, something new might be invented by another company that takes the world by storm and Apple could follow in Sony's footsteps.

 

Perhaps not so well known in the United States, Grundig was also in Europe a very successful brand in Consumer Electronics, with very niece equipments.

 

Noone can predict the future, for sure, but I am confident in Apple's future, precisely because this is not just a question of market share, and because Apple does not just sell hardware , but  mix of various other things, which tend to grow in importance as time goes by.

post #12 of 24
Quote:
Originally Posted by umrk_lab View Post

Perhaps not so well known in the United States, Grundig was also in Europe a very successful brand in Consumer Electronics, with very niece equipments.

Noone can predict the future, for sure, but I am confident in Apple's future, precisely because this is not just a question of market share, and because Apple does not just sell hardware , but  mix of various other things, which tend to grow in importance as time goes by.

Those old Grundig and Telefunken radios were such beautiful sets, I wonder if they inspired Dieter Rams at all, and thus Jony Ive secondarily.

Apple's crew has probably discussed what happened to Sony at great length, and are determined not to repeat those mistakes. They have three things going for them that Sony didn't have, the way I see it.

–Focus on design,

–Usability and user satisfaction,

–Simplicity and focus of the device itself, product integrity, in other words.

I keep saying that this is something new in business history, in consumer products, in the U.S., at least. Sony didn't really have these ideas, but rather was focused on newness and miniaturization mostly.

The last thing I hope they'd want to do is spread their focus to cover mainstream entertainment, which may be too threatened in the future anyway.
post #13 of 24

I think Apple has become the "American Sony" (in the good ways...and better) as Steve Jobs intended. The real question is where Apple goes from here. Sony is something of a cautionary tale.

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post #14 of 24
Quote:
Originally Posted by Smallwheels View Post

Thirty years ago Sony meant something in the audio equipment world. It is interesting that it is rare for me to see any dedicated audio equipment in anybodies house these days. I've got an old receiver and power amp that I never use. All of my audio comes from quality computer speakers. Anything bigger would be too loud in my apartment. Wal-Mart doesn't sell Sony TVs anymore. That must hurt.

Alfiejr has it right, except for the publicly traded part not being for sale. The world fluctuates. Things change. When Apple is totally dedicated to tablets and phones and doesn't make computers anymore, something new might be invented by another company that takes the world by storm and Apple could follow in Sony's footsteps.

You are totally right.

 

Thank god Apple still makes the best computers in the world, the best phone and tablet in the world, the best media player, the best software available. Also, thank god they have the best supply chain in the world, light and mean, +150 billion dollars, so they can change and react to any sudden trend.

 

Also, thank god they are the ones setting those trends, unlike everybody else.

 

Please... Apple going the path of Sony? Maybe, but it still has a very looooonnnng way to go for that to be viable.

post #15 of 24
This article suggest Sony would be able to compete with Apple and Sammy better if it sold off its entertainment arm. What a stupid suggestion.
Sony use to be an Apple like company but has now fallen victim to market forces that want more profits at the expensive of quality.
Look at HP and tell me, if you remember the good old days, when HP's swag was off the hook! Now look at them. Cheap a** printers and overpriced ink.
Apple is going that way to in a few years. Once they can't dazzle with a new ipad, iPhone and iMac their business is going to go down hill to.
post #16 of 24
Quote:
Originally Posted by MJ1970 View Post

I think Apple has become the "American Sony" (in the good ways...and better) as Steve Jobs intended. The real question is where Apple goes from here. Sony is something of a cautionary tale.

When you think of the gazillions of Sony products that were available a few years back and look at Apple's lean product offering the worry you have, I am happy to say, is a non starter.
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post #17 of 24
Quote:
Originally Posted by digitalclips View Post


When you think of the gazillions of Sony products that were available a few years back and look at Apple's lean product offering the worry you have, I am happy to say, is a non starter.

 

First, I didn't say I was worried.

 

Second, you assume that the only manner in which a large company can become a shell of its former self is the same path Sony took. Apple certainly could stumble, but likely for different reasons.

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post #18 of 24
Quote:
Originally Posted by MJ1970 View Post

First, I didn't say I was worried.

Second, you assume that the only manner in which a large company can become a shell of its former self is the same path Sony took. Apple certainly could stumble, but likely for different reasons.

When some one start off with 'Firstly' I assume ... probably a big mistake 1wink.gif ... you are being defensively assertive. So let me apologize for accidentally ruffling your feathers. I was actually writing in a supportive / agreeable frame of mind.

I read 'Something of a cautionary tale' : and understood (as per wikipedia) "A cautionary tale is a tale told in folklore, to warn its hearer of a danger." My bad I took your phrase and assumed a warning of danger could equate to a 'Worry': ... as per wikipedia ... Worry is thoughts, images and emotions of a negative nature in which mental attempts are made to avoid anticipated potential threats or danger.

Your second point is valid. I was offering what I saw as the worst error IMHO Sony made. Far too many fracking products. Obviously you had other reasons in mind. So in the spirit of congenial banter, tell me the things you feel ("Sony is something of a cautionary tale".) Sony did wrong.
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post #19 of 24

Oh dear. 1rolleyes.gif

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post #20 of 24
Sony didn't finish in 3rd place this console generation, they finished 2nd. Xbox was 3rd worldwide. The US isn't the only market.
post #21 of 24
Quote:
Originally Posted by MJ1970 View Post

Oh dear. 1rolleyes.gif

hehe, I am in a good mood today 1smile.gif

But I'd appreciate hearing more of what Sony did wrong. I love Sony always have. At one time in the mid 1990's I hoped Sony would buy / save Apple! I used Sony professional products a lot, such as Betacam SP tape decks and video cameras. Nothing could touch them. It is with frustration I watched them go so far down the tubes.
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post #22 of 24
Quote:
Originally Posted by digitalclips View Post


hehe, I am in a good mood today 1smile.gif

 

Good. 1biggrin.gif

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post #23 of 24
Quote:
Originally Posted by maccherry View Post

This article suggest Sony would be able to compete with Apple and Sammy better if it sold off its entertainment arm. What a stupid suggestion.
Sony use to be an Apple like company but has now fallen victim to market forces that want more profits at the expensive of quality.
Look at HP and tell me, if you remember the good old days, when HP's swag was off the hook! Now look at them. Cheap a** printers and overpriced ink.
Apple is going that way to in a few years. Once they can't dazzle with a new ipad, iPhone and iMac their business is going to go down hill to.

I bet you are going to die first than that.

post #24 of 24
Originally Posted by maccherry View Post
Apple is going that way to in a few years. Once they can't dazzle with a new ipad, iPhone and iMac their business is going to go down hill to.

 

I'll reiterate what pedro said, but explicitly qualify it with a statement that in no way do I desire you to die of anything but old age:

 

You will die before this happens to Apple.

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