Famed activist investor Dan Loeb has set his sights on troubled tech giant Sony. Can he do for Sony what he did for Yahoo!?
Dan Loeb thinks Sony would be better off in pieces. And that matters because Loeb, the CEO of hedge fund Third Point LLC and one of the company’s largest shareholders, has a terrific track record with lagging tech companies.
Not long ago, Yahoo! was a company lost at sea. The Internet search pioneer had been eclipsed by upstarts Google and Facebook. Acquisitions such as Flickr floundered. Enter Loeb, the activist shareholder. After exposing Yahoo!’s then-CEO Scott Thompson as a resume-padder, board member Loeb was able to entice Google exec Marissa Mayer to jump ship and steer the helm at Yahoo. (Disclosure: CNBC is a partner with Yahoo! Finance on “Talking Numbers”)
Loeb, whose company owns 6.5% of Sony, now wants the Japanese electronics giant to sever its entertainment arm. Doing so, Loeb believes, would let the company focus on catching up with its rivals like Samsung and Apple.
Can Loeb succeed?
“Loeb's proposals are not groundbreaking, in that many before him have called for the spinoff of Sony's entertainment business, but to no avail,” says Enis Taner, Global Macro Editor at RiskReversal.com and Talking Numbers contributor.
The hedge fund manager may not find it as easy to shake things up at the 67 year-old Japanese iconic institution. “Loeb's stake in Sony has generated excitement given his spectacular success in positive change at Yahoo,” says Taner. But that may not be enough given the business culture in Japan.”
“I'm much less enthusiastic about this activist foray, as Japanese corporates have been more resistant to changes pushed by activist investors in the past. Loeb has a much steeper climb ahead of him in this fight than in battles in the US, where corporations are more responsive to investors.”
As of now, Sony isn't warm to Loeb's suggestion. "The entertainment businesses are important contributors to Sony's growth and are not for sale," it said in a statement.