Third Point’s Phony Battle with Sony

Activist investor

Daniel Loeb

is facing another setback at


SNE -0.05%

But if this is what failure looks like, he should try to fail more often. The Japanese conglomerate on Tuesday rejected a request from Third Point, a New York-based hedge fund run by Mr. Loeb, to spin off its semiconductor unit. In June, the fund said it had invested $1.5 billion in Sony and called for a breakup, arguing that the company’s semiconductor business, which makes image sensors for smartphones including


’s iPhones, has little to do with its games and entertainment units. Sony also turned down Third Point’s suggestion that the company sell its 65% stake in insurer Sony Financial, which would raise around $6 billion.

A previous attempt by Mr. Loeb to split up Sony also failed. Back in 2013 he campaigned for a spinoff of its movie and music businesses.

Third Point has called for Sony to spin off its semiconductor business, which makes image sensors.


Akio Kon/Bloomberg News

Mr. Loeb makes fair points: The semiconductor and financial divisions have few synergies with Sony’s other businesses. The rejection isn’t a surprise, though. Even though activist investing has been growing in Japan, driven by Prime Minister

Shinzo Abe

’s push for improved corporate governance, it is still at an early stage. Such a radical corporate overhaul to engineer higher shareholder value—the two segments in question accounted for 40% of Sony’s operating profit last quarter—would be a real rarity in the country. It is particularly unlikely at Sony, whose current management team is well-liked by investors. The company has staged a turnaround since 2012, and its share price has risen more than eightfold. Mr. Loeb may have little luck with spinoffs, but he has already gotten some lower-hanging fruit. Sony announced a ¥200 billion ($1.85 billion) buyback shortly after media reports in April said Third Point was building a stake. Last month Sony sold its 5% stake in Olympus, generating around $740 million. Olympus is one of the noncore shareholdings Mr. Loeb said Sony should get rid of, even though the company denied the sale had anything to do with the activist’s demands. Mr. Loeb may be able to generate momentum for more in the same vein. Sony is still sitting on its $5.3 billion stake in health-care information provider


Sony’s Tokyo-listed shares have risen 33% since the April media reports about Third Point’s stake. Mr. Loeb would be wise to start counting his winnings. Write to Jacky Wong at

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