Sony’s $100 Billion Lost Decade Supports Loeb Breakup

Sony’s $100 Billion Lost Decade Supports Loeb Breakup

By Angus Whitley, Brooke Sutherland and Naoko Fujimura – May 16, 2013

Sony Corp. (6758) has a $100 billion reason to consider Daniel Loeb’s breakup proposal.

Loeb, whose Third Point LLC hedge fund just took a $1.1 billion stake in Sony, is pushing the Tokyo-based company to sell as much as 20 percent of its entertainment business and focus on the “considerable and underappreciated value” of its electronics unit. After Loeb’s proposal sparked the biggest rally in Sony shares in more than four years, the $21 billion company still languishes at a cheaper valuation relative to profit than 90 percent of similar-sized consumer electronics makers, according to data compiled by Bloomberg yesterday.

Loeb is approaching Sony after shareholders lost more than $100 billion in market value since 2000. CLSA Asia-Pacific Markets said Sony would be worth 28 percent more in a separation. While estimates from Macquarie Group Ltd.’s Damian Thong fall short of Loeb’s targeted 60 percent stock gain, the analyst said the activist’s claim that spinning off the entertainment unit and boosting its profitability may raise the company’s market value by about 30 percent “seems reasonable.”

“Sony is a chronic underperformer,” Joshua Strauss, Chicago-based co-manager of the Appleseed Fund at Pekin Singer Strauss Asset Management Inc., which oversees about $1 billion, including investments in Japan and Korea, said in a telephone interview. “Should they spin off the entertainment division? Would it create shareholder value? Probably. When you do that sort of thing, the sum of the parts is greater than the whole.” Read more of this post

Chinese economy replaces EU debt crisis as investors’ top concern

Chinese economy replaces EU debt crisis as investors’ top concern

Staff Reporter 2013-05-16

Predictions that China’s economy will face a hard landing leading to a commodity collapse has replaced the European sovereign debt crisis as one of the main concerns of international and domestic investors, with many reducing their investments in emerging markets and commodities to invest in Japanese and European equities, reports our sister paper Want Daily.

A report released by the Bank of America Merrill Lynch earlier in the month showed that many investors are currently forecasting a weakening Chinese economy, with those feeling positive about the country’s economic outlook dropping by 8%. It is the first negative figure in fourteen months, while 25% of the fund managers surveyed considered a hard landing a possibility in China, a sharp increase from the 18% recorded last month.

Approximately 29% of the fund managers have already reduced their investments in China’s commodity market, while investments in Japanese equities have increased for the seventh consecutive month, surpassing the 31% recorded in May 2006. Read more of this post

Bentley Luxury-Car Sales in China Cool; Global luxury goods market to cool in 2013: Bain

May 15, 2013, 11:07 a.m. ET

Bentley Luxury-Car Sales in China Cool

By COLUM MURPHY

BEIJING—The maker of Bentley luxury cars is the latest high-end auto maker to warn that ebbing confidence among Chinese consumers and a government-led drive against conspicuous consumption has hurt demand for its expensive rides. Read more of this post