Analysts Reiterate Call For Sony Breakup

Various analysts are parroting the call made last year by no less than investor Dan Loeb to breakup Sony. We discuss where Playstation fits in all this below.

Of course, this comes from the fallout of their last financial year report, which now gives it its sixth annual loss in seven years, and an even longer trend of losses if you take nonconsecutive losses into account.

The common consensus is that splitting the divisions apart, particularly the entertainment and electronics divisions, would make it easier to valuate them. Furthermore, there’s an opportunity to make more money on the entertainment side after there’s been a proper opportunity to assess this value.

This was the argument set forth by Dan Loeb when he attempted to convince Sony into spinning off part of their movie division. Given Japanese have been reticent about selling out to outsiders, of course, this did not push through.

Many have argued before, as I’m sure you are thinking, that although Playstation is reported in financial reports under the electronics end, it should be considered both an electronics and entertainment division. Many analysts see Playstation as electronics, but they do recognize it as a high growth segment as well. If a breakup would ever come to pass, analyst Chris Konstantinos of Riverfront suggests that Playstation be bundled with the other profitable businesses, mostly on the entertainment side, to make the high profits the company needs for its electronics segment to recover.

Dan Loeb chose not to comment on this story, while Sony released a statement indicating they were focusing on bringing back shareholder value by making money back in electronics. Investors may no longer want to wait to see that happen, however, and Playstation may soon be caught up in some fundamental changes to its business structure. 

Image is of the Playstation 4.