Oct. 31 - Months after activist investor Dan Loeb called for Sony’s breakup, the manufacturing and entertainment conglomerate slashed its profit forecast after a relapse in the TV unit and a summer Hollywood flop. Fred Katayama reports.
Sony's activist investor Dan Loeb must be fuming. The electronics giant that had rejected his demand that it spin off its electronics unit from its Hollywood business saw its profit swing back into a loss. Sony's recovering TV operation relapsed into the red. And the target of Loeb's criticism, its studio unit, produced a big flop with "White House Down." That dragged motion picture earnings down into the red from the profit the year before.. Under its new president, Kazuo Hirai, Sony had cut thousands of employees in a bid to turnaround its electronics business. But even the weaker yen hasn't turned around its fortunes. Sony sharply cut its operating income forecast by 26 percent for the full year. Makoto Kikuchi, CEO of Myojo Asset Management, said, "I still cannot see any fundamental and believable strategy for the rebirth of Sony's electronics business." Sony's shares trading in the U.S, which have risen 74 percent this year along with Japan's stock market recovery, sharply fell at the start of trade. Since the day before Loeb revealed his stake in Sony in May, the stock has shed more than 2-1/2 percent. Adding to his and Sony's pain: Sony's archrival, Panasonic, which is cutting its exposure to its TV business and expanding its industrial businesses, swung into the black and doubled its profit forecast.