Sony CEO Kazuo Hirai says the company will not spin off a portion of its entertainment business, responding to investor Daniel Loeb of Third Point LLC's proposed plan to boost performance at the Japanese electronics giant.
In his four-page letter to Loeb, Hirai wrote "after careful review, the Sony Board of Directors has unanimously concluded that continuing to own 100% of our entertainment business is the best path forward and is integral to Sony's strategy."
"Sony Pictures and Sony Music are critical elements of our strategy and fundamental drivers of Sony's growth for the future," Hirai wrote, later adding, "I am personally involved in the oversight of these businesses and firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses."
On the electronics front, Hirai said Sony is committed to revitalizing the division, saying, "While the industry environment for our electronics business remains challenging, we have made significant progress over the past year, and we are confident that we are on the right path." Hirai touts the well-received Xperia line of smartphones and Sony's Cybershot RX1 camera, explaining that the turnaround of Sony's television business is "progressing as planned."
"We are also encouraged by the positive feedback from the announcement of the PlayStation 4, which is highly integrated with our leading networks and mobile businesses," Hirai wrote. "We are investing in Mobile, Imaging and Game, and these business units are inextricably linked to our One Sony strategy."
In May, Loeb urged Sony to let investors to take up to a 20 percent stake in Sony Entertainment and implored it to better focus its efforts on Sony Electronics.
"Sony Electronics has suffered frustrating results for the past decade, brought about by low margins, persistent losses, and weak returns on capital," Loeb wrote in his letter to Sony. "While it is true that Sony has excellent products, such as the PlayStation, Xperia smartphones, and mirror-less cameras, several of Sony's product lines — e.g., personal computers and DVD recorders — lack scale and provide commoditized products at high costs to secularly challenged markets."