Published On: Thu, Jun 20th, 2013

Sony Corp Says No to Daniel Loeb Japanese Style at Annual Meeting

DANIEL LUAB

Daniel Loeb on the right / Bloomberg

/ By Clive Minchom /

Bloomberg reports today Sony Corp Chief Executive Officer Kazuo Hirai has said movies and music are crucial to the company’s revival as he spoke to investors at the company’s Annual Meeting, three days after billionaire Daniel Loeb had tried to reinforce his demand to spin off the businesses.

The Sony Board of Directors will use outside information to “thoroughly discuss” the proposal from Loeb’s private equity company Third Point LLC to sell as much as 20 percent of the entertainment assets, Hirai said at the annual shareholder meeting today. This is a really typical Japanese way of saying “no”, just being very, very polite about it.

It may not matter much as the stock is up 7.3 percent since Loeb announced his plan last month, which he appeared to emphasize further on June 17 by increasing his Sony stake. So, so far both sides are winners as his very public efforts have brought new attention to some of the actual value inherent to Sony at this time. An astute publicist Daniel Loeb likely does not expect his proposals to be either accepted or implemented, only to boost the public perception of the Sony story.

CEO Hirai also seems to be riding a winning streak, with the shares more than doubling this year, orders for PlayStation 4 video-game consoles higher than early estimates and Xperia smartphone shipments in Japan reaching a three-year high. Sony Pictures Entertainment this week just announced dates for the third and fourth installments of the “Amazing Spider-Man” franchise.

“My mission this year is to turn to a more aggressive approach with bolder measures, ” Hirai told investors in Tokyo. “We expect our smartphone operation will improve earnings, making the TV unit profitable is a goal that must be met, we will accelerate expansion in emerging markets and new businesses.” These are not the statements of a man lacking in confidence that he can deliver, especially when you place them in the Japanese context of cultural indirection.

Even before the new Board of Directors, which was elected today, considers Loeb’s proposal for an entertainment IPO, investors also seem to agree those assets are undervalued. Bloomberg reports that Sony, the third-best performer in the Nikkei 225 Stock index, has risen more than double its closest domestic peer Panasonic.

So Third Point’s holdings have already benefitted from Daniel Loeb’s activism and CEO Hirai is happy too – win-win for both of them it seems as value can be un-locked in more ways than one. Loeb also gets more public exposure for his fund Third Point which, coming after his success with Yahoo, can only bring him more new investors into the fund.

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