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Sony stock surges after Reuters reports Third Point re-building stake

Published 04/09/2019, 03:05 AM
© Reuters. FILE PHOTO: A shopper looks at Sony Corp's Bravia television monitors at an electronics store in Tokyo
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By Makiko Yamazaki

TOKYO (Reuters) - Sony Corp (T:6758) shares surged more than 9 percent on Tuesday after a Reuters report saying Third Point LLC was again raising its stake in the Japanese conglomerate stoked speculation that fund owner Daniel Loeb was preparing to agitate for more change.

Third Point, which has about $14.5 billion in assets under management, is raising a dedicated investment vehicle targeting $500 million to $1 billion in capital to buy Sony shares, people familiar with the matter said.

A Sony spokesman declined to comment on the report.

Sony shares rallied 9.3 percent to a one-month high in Tokyo trade, recovering from a slump last month triggered by concern that its turnaround of recent years had lost momentum.

The electronics and entertainment conglomerate had a market value of 6.7 trillion yen ($60 billion) at Tokyo's Tuesday close.

The move would be Third Point's second campaign for change at Sony in six years, coming as investors look for the company's next profit pillar amid signs its gaming business is slowing and as its PlayStation 4 console nears the end of its lifecycle.

Third Point wants Sony to explore options for some of its business units, including its movie studio, which the fund believes has attracted takeover interest, the sources said.

Sony Chief Executive Kenichiro Yoshida sees movies, music and other intellectual property as central to stable revenue growth, having battled years of losses in consumer goods such as television sets that are more susceptible to price competition.

"I don't think a sale of the pictures business is an option for Sony now because entertainment content is becoming crucial for the company," Ace Securities analyst Hideki Yasuda said, pointing out synergies seen in the success of action game Marvel's Spider-Man and the related movie series.

"The profit margin at Sony's pictures business is thinner than rivals, but that's a result of past management decisions, including the sale of rights to Spider-Man merchandise."

The business is on track to recover from a series of short-term measures that cost the company long-term profit, Yasuda said.

Sony forecasts its pictures segment to report 50 billion yen in operating profit for the year ended March, less than a tenth of the estimated 870 billion yen profit for the entire company.

Sony has recently downsized or exited several television channels within the pictures segment to cut costs, while scoring blockbuster hits such as 'Jumanji: Welcome to the Jungle' and 'Venom'.

© Reuters. FILE PHOTO: A shopper looks at Sony Corp's Bravia television monitors at an electronics store in Tokyo

Third Point last exited a stake in Sony in 2014 with a roughly 20 percent gain on its investment after spending a year and a half pushing for Sony to spin off its entertainment division, a call rejected by Yoshida's predecessor, Kazuo Hirai.

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