TOKYO-Sony’s chief executive, Kazuo Hirai, reiterated Thursday that the company’s music and movie businesses are not for sale, rebuffing a renewed push by the American activist investor Daniel S. Loeb to break up Sony’s sprawling empire, though the company’s board would continue to study the matter.
Speaking to shareholders at the electronics and entertainment giant’s annual general meeting in Tokyo, Mr. Hirai said that movies and music were an indispensable part of Sony’s growth strategy. Mr. Loeb’s firm, Third Point, which claims to be one of Sony’s biggest shareholders, has proposed that Sony partially spin off its entertainment arms and invest the proceeds into its struggling electronics business.
‘‘The entertainment business plays an important role in Sony’s future growth,’’ Mr. Hirai told investos, saying it added critical value to the company and should not be let go. ‘‘This proposal strikes at the heart of what kind of company Sony ultimately will become in the future,’’ he said. ‘‘We intend to take our time in discussing it.’’
Mr. Hirai’s remarks came after Mr. Loeb upped the ante in what is a rare bid to shake up one of Japan’s most storied companies. In a letter to Sony’s board sent on Tuesday morning, Mr. Loeb disclosed that Third Point had raised its stake to about 7 percent, or about 70 million shares, up from 6.5 percent last month, and urged that Mr. Hirai take his proposal seriously.
On top of raising capital to help bolster Sony’s electronics strategy, Mr. Loeb argues that giving the entertainment business its own board would provide stronger oversight of revival efforts and spending plans.
But some analysts! have questioned the wisdom of spinning off some of Sony’s profitable content businesses â€" which could cut off much of the company’s access to their lucrative cash profits â€" while keeping its loss-making electronics divisions. Over the past ten years, Sony had made most of its operating profit from is content and insurance arms, while electronics lost money.
Sony’s cumulative operating profit over the past decade would have been almost twice as high if not for its ailing electronics business, according to Atul Goyal, technology analyst at Jefferies.
‘‘Sony should spin off electronics instead of content,’’ Mr. Goyal wrote in a report released ahead of the shareholders meeting.
The funds raised, he added, could be used to fund growth of Sony’s already- lucrative content business. Such a move, he said, would ‘‘add significantly more value for investors.’’
