June 18 - Hedge fund manager Daniel Loeb raises his stake in Sony and further pressures the company to spin off its entertainment business. Fred Katayama reports.
Activist investor Dan Loeb is pumping up the pressure on Sony. His hedge fund, Third Point, is raising its bet on the electronics giant to about 7 percent, gambling 1.4 billion dollars on its revival. And he's putting his mouth where his money is, calling for more change. In a second letter to Sony CEO Kazuo Hirai, Loeb urged the company to create an independent board to run its entertainment business that Loeb wants partially spun off. He again offered to put a Third Point rep on Sony's board. Sony said its board would consider the spin-off proposal but didn't comment on the latest letter. Macquarie Equities Research analyst Damian Thong doesn't believe Sony will totally satisfy Loeb's demands. He said in a note: "We do not assume Sony will proceed with the entertainment business carve-out as proposed by Third Point. Recent management comments suggest that they are comfortable with the status quo." The drama unfolded last month when Loeb proposed that Sony do an IPO for its profitable movie and music business. He said that would unlock the value of Sony's shares and send it up as much as 60 percent. Sony's stock rose more than 4 percent in Tokyo Tuesday. It has more than doubled so far this year. Reuters Japan bureau chief Kevin Krolicki says Loeb's latest move signifies he is invested in Sony for the long term. SOUNDBITE: KEVIN KROLICKI, REUTERS JAPAN BUREAU CHIEF, (ENGLISH) SPEAKING: "It was significant first in that is Dan Loeb telling the market, and telling Sony management, that he's still there and that he intends to stay invested in the company for the long haul despite the volatility that we've seen in Tokyo markets in recent weeks." All this comes just two days before Sony's annual shareholders meeting where the key agenda is the election of the board.