Sony investor calls for complete spin-off of sensor division
Sony's semiconductor division (which makes its image sensors) has for years been one of the most successful business units within the Japanese company, generating 16 percent of Sony's total operating profit in the fiscal year ended in March. It was spun off as a separate company in 2015 but remained a wholly-owned subsidiary of Sony that’s under its full control and direction.
Now several business publications report that American activist investor Daniel Loeb who owns a $1.5 billion investment in Sony is calling on the company to separate its sensor business completely 'to unlock the Japanese group’s true worth as a global entertainment powerhouse.'
The investor wants the business unit to become a completely independent public company with its own stock listed in the Japanese stock exchange.
The investor wants the business unit to become a completely independent public company with its own stock listed in the Japanese stock exchange. This would allow Sony to focus on its entertainment businesses, including gaming, music, movies, and television while the image sensor business could thrive on its own.
'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. He later says:
'As a standalone public company listed in Japan, Sony Technologies would be a showcase for Japan’s technology capabilities. Rather than just an uncut rough stone buried inside Sony’s portfolio, Sony Technologies would be visible as a Japanese crown jewel and technology champion.'
However, a Reuters report lists a few reasons why a total separation could not be such a great idea. 90 percent of Sony’s chips revenue comes from smartphones which makes the unit particularly vulnerable to the business dispute that is currently being fought out between Washington and Beijing. Chinese smartphone maker Huawei, which has been banned from working with US technology firms is a major Sony customer, which is why recently analysts at Jefferies have decreased the Sony chip business' operating profit forecast by 45%.
On the other hand, smartphones use more and more cameras per device and the demand for cameras and image sensors is increasing in other sectors as well, for example automotive.