Sony Boss Shrugs Off Break Up Questions Shareholders Not Happy
The President of Sony Kenichiro Yoshida has stone walled shareholders by refusing to answer questions relating to the proposed break up of Sony being pushed by a major shareholder.
“We cannot comment on specific shareholders,” Yoshida said. “Sony will continue engaging with all of its shareholders and investors.”
Both retail and institutional investors told Nikkei Asian Review they want answers from the Japanese Company who many believe is “undervalued”.
But while Sony insists it is maintaining a healthy dialogue with shareholders, investors — both institutional and retail — appear to be siding with the activist fund claims the Nikkei Asian Review.
Last Thursday, in a letter to investors, the New York-based hedge fund Third Point, led by Daniel Loeb called Sony “one of the most undervalued large-cap businesses in the world today.” He said the conglomerate is trading at a heavy discount despite the recent recovery in both its entertainment and electronics businesses.
“Sony really has to think about its shares. It is way too undervalued,” said a man who has been a shareholder for about four years. “Although their corporate strategy for the future, as Yoshida-san explained earlier this month, is thorough and good, he also needs to address how they plan to increase share value without approving Third Point’s suggestions.”
Although Third Point did not submit an official shareholder proposal that would have been voted on at the AGM, the fund acknowledged in its letter that it has reinvested in Sony to the tune of $1.5 billion. This marks its second campaign against the Japanese conglomerates since 2013, when it failed to persuade Sony to sell part of its entertainment business.
This time around, Third Point is making four main proposals, including the full spinoff of Sony’s semiconductor business, the world’s largest image sensor manufacturer, and its listing as Sony Technologies, as well as the sale of its stakes in subsidiary Sony Financial and other companies, such as Spotify.
At the AGM, Yoshida emphasized that the image sensor business will have a high return over a long period of time, though he acknowledged that investments in the segment will increase in the coming years due to a rise in demand and market expansion. He emphasized, however, that the company does not expects its equipment and technology to become obsolete.
Although Yoshida avoided a direct comment regarding the image sensor business and Third Point, he said Sony’s board “has always and will continue to discuss the company’s business profile and how to improve corporate value in the long run.”
Sony did not give a detailed explanation at the general meeting about how it plans to deal with the activist fund’s proposals.