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Sony in talks with Morgan Stanley, Citigroup on Electronics and Entertainment split – report

Sony is reportedly in talks with Morgan Stanley and Citigroup regarding splitting its Entertainment and Electronics divisions.

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bloomberg.com
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DiRtY1605d ago

So Sony is splitting the entire company. There will be a comapny for entertainment and one for electronics.

Loeb, which is a major Sony investor and owns quite a big part of the company, wants to sell at least 15% of the entertainment part to fund the electronics company.

And no, this is not just a restructuring thing. Sony won't be the same company after this. They are starting to sell big parts of it.

Playstation will be in the electronics part of the two new companies along with TVs, cameras and audio systems as far as we know.

mushroomwig1605d ago

You really have no idea what you're talking about do you?

jimbobwahey1605d ago

Yeah, I thought PlayStation came under the entertainment division along with music and movies? Since they're also the most profitable division as well, as far as I know, I thought the whole reason for the split so that the entertainment division could prosper without being dragged down by the electronics division's repeated losses while they figure out what to do?

cunnilumpkin1605d ago (Edited 1605d ago )

ummmm

dude.....

http://www.digitaltrends.co...

the playstation brand costs sony millions in loses every year!!!

just like the games division for xbox

why do you think hardly anyone makes consoles?

apple could, amazon could, heck Johnson and Johnson could, they don't see any money in it

im glad sony and ms do it, but many of their shareholders are not

Panthers1605d ago

That is the PS3. The PS2 had huge profits and helped Sony with its other struggling divisions.

BeZdaBest1605d ago (Edited 1605d ago )

@ panther... ps2 got money.. ps3 lost it all an then some..

in 2000 sony had 100 billion dollars..in 2010 only 18.b

so yay come people we know the ps3 was destroying the bank for 5 years( a little bit after the second model was released)

its doing a little better now but nuthing to write home about

GameNameFame1605d ago

That PS3 was the reason what caused Sony to lose near 100 billions?

LOL. are you out of your mind? PS3 loss was tiny fraction in that 100 billion

soniqstylz1605d ago

@cunnilumpkin

SCE is profitable every year (that particular quarter in your link they posted a $45 million loss; but in the year ending that March, they had a $370 million profit

http://www.gamesindustry.bi...

DiRtY1605d ago

@mushroomwig and all the disagrees,

This is about an IPO of the entertainment segment. If you don't know what an IPO is, look it up. That means (at least a part of it) is for sale and will be offered for the very first time. Talking is that there are 15% - 20% offered. You can read that in the article.

Kaz said that the entertainment part of Sony is not for sale. 3 weeks later there is a 180° turnaround.

"Third Point LLC’s Loeb, which acquired more than 6 percent of Sony, is pushing Chief Executive Officer Kazuo Hirai to sell as much as 20 percent of the entertainment assets in an initial public offering."

straight from Bloomberg. Read it here: http://www.bloomberg.com/ne...

So Sony is about to sell a part of the company.

The 10% rise of Sony shares after the Xbox reveal was not due to MS. It was because Loeb communicated that Sony should split the company and investors jumped on it. Of course gaming sites like N4G did not get this at all.

@ jimbobwahey
No, the PS division is not the most profitable part of Sony. Not at all. Sony financial services is the most profitable division. Sony does a great job selling life insurances.

Look it up: http://www.sony.net/SonyInf...

@DJ Marty,

Companies do this all the time?
If so, feel free to name me a couple of companies that did this recently. Companies do not do this all the time, that is just nonsense.

And IF the Playstation is a part of the new entertainment company, it will be partially sold as well. I am not making this up.

I still believe it will be part of the electronics segment though.

1604d ago
dlocsta1604d ago

About ten years ago Sony was my biggest client. My department made the repair manuals for Sony TVs. This was when the XBR was the hottest thing on the market and even then Sony was bleeding money form the electronics department. Let me clarify, they were making a profit but it was a shrinking protfit every year. I know because I was privy to a lot more at that time. So much to the point that in 2001 (I am going to tell you something you never knew) Sony began to used the Mitsubishi all-in-one processor chip for their large screen HD TVs because the Sony architecture used three separate chips (and did provide a better picture)and was cutting deeply into the profits on the TVs. I said all of that to say this, PS is in the electronics division, period. Just because it is produced by SCEA (Sony Computer Entertainment America) does not make it entertainment. If you notice the word computer is in there as well and I also made the repair manuals for Sony computer monitors. For those of you still using CRT monitors, it you look closely at your monitor and see two lines separating the screen into three equal parts horizontally, I don't care what name is on the basil, it was made by Sony.

+ Show (6) more repliesLast reply 1604d ago
DJMarty1605d ago (Edited 1605d ago )

@DiRtY - Companies do this all the time, issue shares to raise investment funds.

Sony will be STRONGER after this.

QUOTE
'Loeb said that he owns 64 million shares of Sony, giving him just shy of a 6.5 percent stake.'

6.5% does'nt seem much of a share.

@THC CELL - Sony arn't selling up, they looking into issue shares in a split Sony company. Money raised will be reinvested.

Sony not going anywhere. Sony share value is rocketing.

GameCents1605d ago

Doesn't seem like much of a share but is the biggest share held by a single investor/group.
Also, SONY shares went up in response to these rumours.

It always makes me chuckle how n4g flip flops according to SONY's decisions. When this was first rumoured everybody who said it wouldn't happen because SONY was too strong got massive agrees.
Now that it seems it might happen, anyone that suggests it's a great thing that will make SONY even stronger is getting massive agrees. Just plain LOL.

Dlacy13g1605d ago

@DJMarty, companies do offer stock splits often...they DO NOT offer to split the company often.

Whether or not it happens remains to be seen but clearly something is brewing given their (Sony's) response to recent questions about it:

"A Sony representative clarified matters at the time by stating that it welcomes investments and dialogue with shareholders, but that Sony Entertainment wasn’t on the market.

Today, a Sony spokesperson Shiro Kambe declined to comment, as did representatives for Morgan Stanley and Citigroup."

dcbronco1605d ago (Edited 1605d ago )

DJMarty it looks like they plan to split the company and do a IPO on the new company. That money would then be used to try to prop up or fix the rest of the company. I'm not sure how they plan to help the people that own common stock. They most likely get left with the Hardware part of the company. And that stock will plunge. But Sony being a Japanese company they will probably show more class. If it were a US company I would expect the common stock holders to get screwed like they did with GM.

The new company should rise. But the company as a whole is already junk bond status or close. This might make it pure junk bond until they can get it together if that is possible. One other possibility is that this is a move that will separate anything of value so that it can be protected from a bankruptcy. If they move Financial services with Entertainment common stock holders better look out. Financials have been one of the few bright spots. It most likely means bankruptcy for Sony proper.

I just looked up the rating of the stock and it doesn't have one. I would get out if I had common stock.

waltercross1605d ago

As far as I know the Playstation brand and It's games are very successful, The TV(electronics) part is losing them money, not the Playstation brand.

+ Show (1) more replyLast reply 1605d ago
sway_z1605d ago (Edited 1605d ago )

Even MS were split in 2 by a commission in the late 90's or early 2K, happens all the time.

...and Sony will still hold the dominating share if only 15% is sold.

PigPen1605d ago

That's not how it works. If you stop riding nutz you will know that. When its sold its gone, like forever.

dcbronco1605d ago (Edited 1605d ago )

MS was never split. There was a threat that they would be with business software split off as a separate company. Office and their server business are still a part of the company. It was strictly about MS not having lobbyist in Washington to pay off congressman to leave them alone. Guys like Steve Case from AOL used his political contacts to try to hurt MS.

Sony is splitting to try to raise money and increase the stock price of the entertainment parts of the company. They are being dragged down by the hardware side, mainly TVs. Unless they're doing something different from the first talks, nothing is being sold. The hope is that the entertainment parts will be able to get financing. As a whole right now, it's hard for Sony to get money from anyone.

Edit. Bet you have no idea why you disagree. Or maybe you're just hatin'.

THC CELL1605d ago (Edited 1605d ago )

At the time, a statement from Sony reiterated that "the entertainment businesses are important contributors to Sony's growth and are not for sale.

LeRise1604d ago

Maybe I'm wrong, but I've got an erratic feeling that this Sony's split story will have an effect on the DRM decision.

Remember that words about "A suit may come in and crush our stance to support used games"? Maybe such a suit is waiting for the company decisions to split it or not.

I hope Kaz Hirai makes right decision that will lead to more freedom on PS4 for gamers and will allow offline play and used games. Never before in my life I was worrying about a corporation. Kaz, good luck in there!

danny8181605d ago

Can someone with knowlege please tell me how this will affect the playstation division. Nobody is talking about it and well i wouldnt like to be left in the dark

BitbyDeath1605d ago

In short Playstation will benefit from the split but the TV side will be a lot more vulnerable as it will no longer have the entertainment division help prop it up.

danny8181605d ago

Thanks. Hoepfully it will mutually benefit those divisions. Seeing sony branded tv sets is aleays nice.

RioKing1605d ago (Edited 1605d ago )

^Yes "nice" indeed, but unfortunately a little over-priced. With great TV brands out there, especially with Samsung, having the edge with price would be a nice sales boost. I do love me my Sony Bravias at home though :)

Also I'm gonna piggy-back off of Danny... how will this benefit the Playstation brand?

SlavisH21605d ago

Call your stock holder, "sell, sell, sell"!!!!!!!!!!!

HammadTheBeast1605d ago

Actually, now is the time to buy when shares are going up.

KwietStorm1605d ago

Sure. Sell yours to me. Genius.

PigPen1605d ago ShowReplies(5)
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