By Svea Herbst-Bayliss and Liana B. Baker
(Reuters) – Daniel Loeb’s hedge fund Third Point LLC is building a stake in Sony Corp to push for changes, the second time in six years it has targeted the Japanese electronics maker, people familiar with the matter said on Monday.
Once a market leader in consumer electronics, Sony is now in the midst of a turnaround effort spearheaded by Kenichiro Yoshida, its chief executive who formerly served at its chief financial officer.
The maker of the iconic Walkman and Trinitron TV fell behind the likes of Apple Inc in innovation after the release of the iPod in 2001 and the iPhone in 2007. Sony over the past decade has reinvented itself as an entertainment company with stable revenue from music content and its video game platform.
Investors are now searching for its next source of growth as Sony’s gaming business shows signs of slowing, with its popular PlayStation 4 (PS4) console nearing the end of its cycle.
Third Point’s amassed stake in Sony thus far could not be learned. The hedge fund, which has about $14.5 billion in assets under management, is raising a dedicated investment vehicle, targeting between $500 million and $1 billion in capital, so it can buy more Sony shares, the sources said.
Third Point wants Sony to explore options for some of its business units, including its movie studio, which the hedge fund believes has attracted takeover interest from the likes of Amazon.com Inc and Netflix Inc, the sources said. The hedge fund also wants clarity on how the semiconductor and insurance divisions fit in with the rest of the company.
The sources asked not to be identified because the matter is confidential. Sony and Third Point declined to comment.
Sony reported lower-than-expected profit in February, dragged down by its previously thriving gaming business, even as a one-off gain related to its acquisition of music publisher EMI pushed the quarterly result to a record high.
Third Point last exited a stake in Sony in 2014 with a roughly 20 percent gain after spending a year and a half pushing for Sony to spin off its entertainment division, writing in a letter to investors that the division “remains poorly managed.”
Later Loeb changed his tune, praising the company for cutting costs at the entertainment division and having made management changes.
(Reporting by Svea Herbst-Bayliss in Boston and Liana B. Baker in New York; Editing by Meredith Mazzilli)