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.

[DiRtY]

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.

[mushroomwig]

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

[jimbobwahey]

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?

[cunnilumpkin]

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

[Panthers]

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

[BeZdaBest]

@ 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

[GameNameFame]

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

[soniqstylz]

@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...

[DiRtY]

@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.

[dlocsta]

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.

[DJMarty]

@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.

[GameCents]

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.

[OC_MurphysLaw]

@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."

[dcbronco]

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.

[PiTCHBLaCK]

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.

[sway_z]

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.

[PigPen]

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

[dcbronco]

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 CELL]

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

[LeRise]

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!

[danny818]

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

[BitbyDeath]

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.

[danny818]

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

[RioKing]

^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?

[SlavisH2]

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

[HammadTheBeast]

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

[KwietStorm_BLM]

Sure. Sell yours to me. Genius.

[extermin8or]

Ohhh I now see what it meant-I thought he wanted them to sell their best divisions lol- he wants them to spin them off as a separate company but still sony :p but if the tv section went down completely the rest of the company wouldn't be dragged under with it? So PlayStation, music, films and such would all remain safe? :):)
I like that idea f so lol I think mobiles should go over with entertainment though. Their new phones have been really good and gaining in popularity.
So would this hypothetical split leave Kaz Hirai as CEO of two companies or would someone else take over the job of one :p

[titletownrelo]

shares and stocks? I'm confused, let me get my pill there...limitless.

[ElitaStorm]

i agree, never got taht shares and stocks thingy

wallstreet is too much for my brain

[sashimi]

Lol so much trolling from the comment sections on vg.

[OC_MurphysLaw]

OK people need to understand there are two very decidely different terms being used in this thread.

1) Some seem to think this "split" is a stock split. A stock split is where you take all existing stocks and turn them into double the amount at half the price. Over time "assuming stock value increases" investors will make more money.

Take, for example, a company with 100 shares of stock priced at $50 per share. The market capitalization is 100 × $50, or $5000. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares. The price of each share is adjusted to $25. The market capitalization is 200 × $25 = $5000, the same as before the split.

2)The other split is a Company split, or splintering off a division. This is where a company actually splits off assets that become their own company, and are completely independent of the original company.

An example is Rockwell International - In 2001, Rockwell International was split into two companies, Rockwell Automation and Rockwell Collins — both publicly traded companies — ending the run of what had once been a massive and diverse conglomerate

What we are talking about in this article is a Company Split...NOT a stock split. This is massive news if it comes to be. I don't know if this will be good or bad for Sony Entertainment long term but I do know is it comes to be this is pretty big stuff.

[dcbronco]

Don't you love the way some disagree with the truth.

Adam said it best on Mythbusters.

"I reject your reality and substitute my own".
Only he was making a joke.

[MultiConsoleGamer]

I told you people this was going to happen months ago, but here is the catch, its not a bad thing, its a good thing.

If they split the company into separate pillars, and each will have its own strenghts. One division will not drag down the others, and each will be able to focus on their own goals.

[faysal]

people who are freaking out this is what kaz harai had to say about lobes offer... http://www.sonyalpharumors....

[joeorc]

thank you for posting that because , far too many are putting quite a bit of faith, about D@n Lobe's ability and the Hedge Fund he represents, to be able to do something very many Hedge funds in the past 40 year's look at that again people 40! years have not been able to do, and I doubt very Much this will be the 1st. If you cannot see what's going on, than you have not been paying Attention, Kaz is letting the share Price stay as high as it can right now before he and the "Majority" of the investor's who are japanese by the way tell's Mr D@n Lobe and His Hedge Fund ......No!

Sony employs over 160,000 people D@n Lobe and his Hedge fund want to get at one of the only parts of Sony that is not up for sale. if that was not bad enough, If he was able to get his way of the splitting off the initial 15 to 20% of the entertainment section of sony, that would in effect give his Hedge fund and Investor's by default Vote a inroad for more public buy out.

I will leave this for people to read:

Break up Sony? It's harder than it looks

1)

"We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy." A suggestion, given Japan's long history of not tolerating any shenanigans from shareholders, particularly foreigners with an eye out for the main chance, that would have better ended as "just as long as you are as quiet and undemanding as the average Japanese shareholder." Shareholder activism has never been much of a participating sport in Japan."

2)

." However Mr. Fasol is unsure just how far Mr. Loeb may get. "He does not have that much power over Sony. After all they are not like Sharp ," he says. "They don't have the same problems as Sharp so they don't have a gun to their heads."

3)

"Mr Loeb's tactics are less hostile. But historic evidence suggests that Sony and Japan Inc. are unlikely to heed his call, which essentially echoes the lead of the country's new prime minister, Shinzo Abe. His economic policies seem to have done so much to put Japan back on the map recently. Thanks to massive spending by the Bank of Japan, the nation's economy is on the up, though deflation is still the norm and firms are refusing to budge on lack of plans for new investments, according to the latest figures."

http://tech.fortune.cnn.com...
I doubt the suits of Sony's Board are really considering this move to even be a viable option to fix the underscore problem fast enough for Investor's anyway, this is going to take many more Years to fix, non of which D@n Lobe and the Hedge fund want to give the current people in charge of Sony as a Corporation time to do such, you do not buy this much share's this quick, asking to split a private held section of the company off and try to claim you not Corporate raiding...LMAO

Again reading this

"The entertainment businesses are important contributors to Sony's growth and are not for sale," Sony said in response to Loeb's proposal. "We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."

I doubt very much this is going to go anywhere other than D@n Lobe an his Hedge fund having 64 million shares that he would have to keep hold of for many years until this gets fixed to recoup his ROI or Cash freaking out!

[faysal]

couldnt agree more with you... its just in gaming community some people just love to take simple things and make it in to a big bullshit story and this leads to most of the idiotic haters creating nonsence rumours to let down sony..

[strigoi814]

If i have the money i would buy sony's stock this generation will make a big impact to sony if they finally did it the right way

[whoyouwit04]

LOL this is so funny, if this does happen there will be very few exclusives from sony this gen seeing how the PS3 did contributed to some of that lost. I told you Sony fans your cockiness will lead to the ultimate demise of sony. If you fan boys love sony as much as you claim... then you best hope they charge you for online, and that they use that money to help them before the whole company goes under. Now you people can try to twist this as a good thing all you want, but it is never a good thing when a company has to sell off some of it's assets to stay operational. especially when you go from having to sell buildings to divisions of your company. But, in all honesty I would really hate to see this happen, Like I said before, even if you can't see it in my comments; I do own and love the playstation and nintendo consoles. However, it's their (sony) childish, immature and idolizing fans that make me type the shiot I type.

[PiTCHBLaCK]

Actually, the Entertainment unit is not the Playstation brand, they listed Movies and Music, including the Movie Studios. Not once was Games or the PS Brand ever mentioned. I think the PS Brand is already separate from all of that.

In other words, The PS Brand will not be affected by this regardless of what happens.

[whoyouwit04]

I doubt that, the Playstation brand including vita has done nothing but lost them money. It will be sold to.

[kenshiro100]

You don't know what you're talking about either. Stop.

[PiTCHBLaCK]

I'm going by what they reported, The TV(Electronics) Loses them money, Sony themselves have said that.

http://www.forbes.com/sites...

"Sony’s hardware and software arms aren't always distinct entities, either, with the successful PlayStation brand the most prominent property bridging that gap. A split would leave PlayStation as an open question for the company, investors, and consumers alike, and it could put Sony’s video game business at a distinct disadvantage."

In other words I Hope they don't split, but The PS Brand is Successful.

[joeorc]

"I doubt that, the Playstation brand including vita has done nothing but lost them money. It will be sold to. "

In my opinion; Do not bet on it.

Furthermore, Sony may actually have an opening in its struggling TV business according to Bloomberg. As rivals Samsung and LG fumble on expensive OLED displays, Sony and other lower-cost manufacturers may be able to reassert themselves in the market.

Sony is poised for a comeback, with or without Loeb’s suggestion becoming a reality.

The current spike in share value is a sign that investors are eager to see Sony make bold reform moves, but the company may be able to take less drastic steps and still come out on top. Focusing greater resources into its entertainment arm and scaling back losing electronics operations while continuing to offload office space and trim down their workforce may be enough to steady the ship, even if it’s not enough to inspire temporary spikes in share value.

http://www.forbes.com/sites...

[LeRise]

There is a very successful sculptor named A. A is so talented, everything A makes, everyone wants to buy. A makes a lot of money.

One day, A meets B, also an artist, who used to be successful, but has fallen on hard times; people calls B a “loser” and B is very depressed. A falls in love with B, and says, “Hey, we should get married. I have plenty of money to support you. We can work on our art together. It’d be great.” It didn’t hurt that B is still beautiful and glamorous.

It takes a while, but the partnership works out quite well, and A becomes even more successful. However, B’s art isn’t doing too well, so B decides to go to business school. A pays for it, and B becomes a successful investment banker, and, coincidently, B’s art starts to sell well, too!

In the mean time, however, A’s art stops selling, and A has a big injury that prevents A from doing much work. A’s art and creativity suffers. B says, “That’s OK. You supported me when I was at a loss, so I will support you until you feel better and your art starts to sell again.”

However, A’s health continues to get worse, and C, B’s business partner who is friends of both, becomes concerned. C comes to A and goes, “You know, I know you guys love each other, but B is so worried about you that our work is starting to suffer. I think you guys should divorce. That way, B can really focus on the job. We can give you a stake in our business, so you will have the means to live and take care of your health, and you won’t feel so guilty about B supporting you. I will marry B, in fact, since then our business can then be really successful, and you will be better off in the long run.”

So, for whose sake would this divorce occur?

What should A do?

And what would happen to their adopted child, D?

[Monkeysmarts]

wot?

[LeRise]

If you didn't get it:
A is the Sony's hardware division,
B is the entertainment division.
C is Lobe and his plans to make "fast money" on Sony's splitting.
D, as I get it, is their future business they are growing right now.

[REALZILLA]

For those of you that don't understand how money works, this has two outcomes, SONY could grow thier capital base or fall of the earth. Spitting the economics of a company into 2 seperate entities is vary risky. You could sink one and drag the other under with the negativity associated with it by driving consumer confidence away. Or fund projects that show alot of promise and rocket profits through the roof. When this sort of thing happens it is a capitial builder. It gives opportunities to people that want to own a part of a company that has been a leader of innovation and entertainment. I kinda look at this a little side ways. Over the last ten years SONY has taken a hit from companys, namely Apple, in the cunsumer department. As far as videogames are concerned, this could give needed capital to fight future compition. (Water Water everywhere and not a drop to drink.")

[Monkeysmarts]

All of a sudden a bunch of gamers are financial experts. This is hilarious.