Activist Investor Calls on Sony to Spin-off Image Sensor Business

Nikkei, Reuters, Financial Times: Daniel Loeb, the activist investor behind hedge fund Third Point that has invested $1.5b in Sony, is calling the company to spin off its semiconductor business.

In the year ended in March, the semiconductor unit accounted for 16% of Sony’s total operating profit of roughly $8b.

"When you think of Sony, you think of the Walkman, you think of the consumer electronics business, you know they own a movie studio and some music, but you don't think of them as a Japanese national champion in technology, with a $20 billion going to $35 billion valuation business in sensors," Loeb told the Financial Times. As of now, the whole Sony company is valued at about $62b.

Reuters also quotes valid reasons to reject the spin-off demand, though."For one, some 90% of Sony’s chips revenue comes from smartphones, Macquarie analysts reckon. That makes the business vulnerable as a tech cold war between Washington and Beijing escalates. Huawei, the Chinese titan that has been banned from working with U.S. tech firms, is a major Sony customer, for instance. Analysts at Jefferies recently slashed their operating profit forecast for the Japanese chips unit by 45% as a result.

The longer-term outlook looks shinier. Global smartphone sales are falling, but the number of cameras per phone is going up. Sony will also benefit as automakers and consumers embrace autonomous driving, which will require cars to be equipped with ever more image sensors."