Why It’s Time for Sony Corporation (ADR) (SNE) to Break Up

Page 1 of 2

Sony Corporation (ADR) (NYSE:SNE)Breaking up is hard to do. It can be the hardest decision you make in your personal life. Things were once hunky-dory, but have since gone sour. This is the dilemma facing Sony Corporation (ADR) (NYSE:SNE) and investment banker Daniel Loeb’s proposal to break up the company.

With his investment firm Third Point LLC already buying a $1.1 billion stake in Sony Corporation (ADR) (NYSE:SNE), Loeb now wants Sony to spin off its entertainment and music business and look at developing the electronics side of the company. This comes off a supposed “$100 billion lost decade,” as described by Bloomberg News, in which the company has been lagging behind similar companies in stock and profit performance, namely Apple Inc. (NASDAQ:AAPL) and Samsung.

Part of the reasons for this lag has been Sony Corporation (ADR) (NYSE:SNE)’s inability to modernize and adapt, which is ironic considering that the company was one of the first to bring Japan out from its World War II destruction and turn the nation into an electronics and technology powerhouse in the 1960’s. This trend continued when Sony created the Walkman a couple decades later, ushering in a new era of listening to music. In fact, it can be argued that Apple Inc. (NASDAQ:AAPL) owes its survival in the 2000s to Sony Corporation (ADR) (NYSE:SNE)’s early development, from which the iPod was a result of a natural progression in music. Sony then expanded into entertainment with the very successful Sony Pictures, creators of the new Skyfall and a host of other movies. Let’s not forget the PlayStation dynasty, still considered the gold standard for serious gamers.

It’s this varied success, however, that is the reason why a break-up may be good for Sony Corporation (ADR) (NYSE:SNE). While its entertainment division is very strong, it’s electronics and gadgets that have always been Sony’s bread and butter, and the difficulty Sony Corporation (ADR) (NYSE:SNE) has had in this field is why the company hasn’t been performing at the levels that its rivals in the industry have. According to Bloomberg News, the company’s enterprise value sits at only 4.2 times analysts’ estimated earnings before deductions at $21.4 billion, which is less than half as strong as competitors, which tend to sit at around 8.9 times estimated earnings. This doesn’t paint a good picture for Sony’s future if it continues its less-than-stellar valuation trend.

When a company struggles like the way Sony Corporation (ADR) (NYSE:SNE) has, it may be time to consider change. For example, Blackberry has the same problems trying to stay with Apple Inc. (NASDAQ:AAPL)’s iPhone and Google’s Android, despite being one of the first real smartphone makers that came out. During this year’s Super Bowl, it released a supposedly revolutionary new phone called the z10, and the stock rallied briefly before cooling off in March, although it is still higher than it was before the Super Bowl. Such a decision to stick to its guns and make phones is what will make Blackberry a serious competitor in the tech world and a good addition to investors’ portfolios.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!