http://www.escapistmagazine.com/news/view/76590-Sony-Sells-Financial-Stake-to-Fund-Games-Unit

Robbing Peter to pay Paul I see...;):D

Sony Sells Financial Stake to Fund Games Unit
Logan Frederick posted on 5 Sep 2007 9:00 am
insurance, playstation, ps3, sony, sony financial holdings
Sony spins off its insurance company, to raise cash for its other businesses.

Sony announced that it will be selling its stake valued at ¥332 billion ($2.9 billion) in its Japanese insurance business, Sony Financial Holdings Inc., in Japan's largest initial public offering (IPO) of the year to help fund its electronics and gaming divisions. As of October 1, Sony will sell its 725,000 shares (34.5 percent of its shares) and issue and additional 75,000 at about ¥415,000 per share.

"Sony could use the funds for various options to strengthen its electronics and game businesses," said Mitsuhiro Osawa, a Tokyo-based analyst at Mizuho Investors Securities Co. with an "Outperform" rating on Sony's stock. "A cut in the price of the PlayStation 3 is one option."

JPMorgan Chase & Co. and Nomura Holdings Inc. are managing the offering, Japan's biggest since Aozora Bank Ltd.'s ¥351 billion offering last November. Sony Financial will raise ¥31.1 billion from the sale and plans to invest ¥16.5 billion in a venture with Aegon NV, the second-largest Dutch insurer. The division holds Sony Life Insurance Co., automobile insurer Sony Assurance Inc. and online bank Sony Bank Inc.

T&D Holdings Inc., Japan's only publicly traded life insurer, fell 16 percent this year along with the majority of financial and insurance companies. "Investors are still concerned about the losses from subprime loans. The question for the Sony Financial IPO is how it can persuade investors that it is free from that concern," commented Wataru Kasatani, a financial analyst at Meiji Dresdner Asset Management Co.

Shares of Sony (SNE) rose 2.70 percent to $49.07 during trading Tuesday.

Source: Bloomberg

http://www.escapistmagazine.com/news/view/76590-Sony-Sells-Financial-Stake-to-Fund-Games-Unit

Robbing Peter to pay Paul I see...;):D

Big corporations do things like this all the time. It really doesn't mean much. The 360 division of MS was in the hole for a while after their release. I'm sure Nintendo was, too, for a short time before they began their world domination campaign. :D

Big corporations do things like this all the time. It really doesn't mean much. The 360 division of MS was in the hole for a while after their release. I'm sure Nintendo was, too, for a short time before they began their world domination campaign. :D

You mean to raise money and lower debt right?

Normal business pratice. What's th big deal?

You mean to raise money and lower debt right?

:D

I don't see Msoft or Toshiba doing that.:D

uh oh, they're getting ready to buy warner and universal!

Holy crap. I didn't realize I would have to put on a tin foil hat and flame retardant suit just to point out common business practice.

**Slowly backs out of the burning building**

"Set a man a fire, and he will stay warm for the night."
"Set a man on fire, and he will stay warm for the rest of his life." *

I don't know, I think he gets 1st to 3rd degree burns, and dies? :confused:

So last year Sony felt this was a great investment (2nd year of birth) - but this year - SELL IT!

http://www.sonyfh.co.jp/en/financial_info_e/ar_e/060905_02.pdf

Still looking for the 2007 AR to see what management has to say about this division.

I thought owning an insurance company was like a license to print money?:D

So last year Sony felt this was a great investment (2nd year of birth) - but this year - SELL IT!

http://www.sonyfh.co.jp/en/financial_info_e/ar_e/060905_02.pdf

Still looking for the 2007 AR to see what management has to say about this division.

You know they are really good at talking out of both sides of their mouths.;)

Big corporations do things like this all the time. It really doesn't mean much. The 360 division of MS was in the hole for a while after their release. I'm sure Nintendo was, too, for a short time before they began their world domination campaign. :D

Companies under duress don't "do this all of the time". Normally companies that spin off divisions do so because.

A. They either see problems in the future and want to divest (could be the case in subprime exposure).

B. Division has been wildly successful and they want to sell at a significant gain to grow the core business.

C. They need liquidity to finance other areas of the core business. This could mean those areas are under distress, or not.

Frankly, Sony's position hasn't been great. They don't produce as much cash as say, Microsoft, and their other divisions aren't producing enough to subsidize the gaming unit as effectively as the market would like. More or less, the markets seem to see the PS3 as a cash and revenue drag, something which is abnormal for Sony since they were the darling of game systems. Relatively speaking, seeing MSFT up as much as they are, with them repurchasing billions in stock with the ridiculous amount of cash they generate, with Nintendo doing much better, and with comparable CE companies doing better, SNE sold to raise funds to subsidize their losses in other divisions. The future flow of cash wasn't enough to do so, so they brought that flow into the present by selling a chunk.

Its the analyst opinion of what the money "could" be used for.

Of course its the speculation that gets reported as fact, while the actual facts are ignored. Typical.

Big corporations do things like this all the time. It really doesn't mean much. The 360 division of MS was in the hole for a while after their release. I'm sure Nintendo was, too, for a short time before they began their world domination campaign. :D

Yes companies do this all the time, BUT you have to be very very careful. Sony Annual Report - Business Overview (http://www.sony.net/SonyInfo/IR/financial/ar/2006/qfhh7c00000aksvu-att/qfhh7c00000aksx9.pdf) Look at this and look at the operating income for the different divisions. We know the gaming division is running in the red now, which leaves the pictures business as the only division operating in the black. The money generated by the financial services division (188.3-Billion Yen) was making up for all losses in the CE and Gaming divisions, and now it's being spun off.

I think this is another much ado about nothing. Sony has some money tied up in a shaky business, and I don't mean BD/PS3 however shaky they are. This is an ordinary business transaction. How they use the dollars is their business. Too many people around try way to hard to read tea leaves.

I don't know, I think he gets 1st to 3rd degree burns, and dies? :confused:

Let's test it! We can start a poll to find someone who really sucks, then we will use him/her as a guinea pig to see what happens! :p

So what about the $10 billion in debt that Sony is dragging around? This was linked in another thread.

Debt = higher interest rates paid for short and long term loans. The higher the debt - the higher the rates. $3 billion would mean a 30% reduction in overall debt. Banks like that kind of stuff you know.

I don't know, I think he gets 1st to 3rd degree burns, and dies? :confused:
But he's warm the entire time, is he not?

I don't know, I think he gets 1st to 3rd degree burns, and dies? :confused:

Exactly, the quote is humorous, not literal. :p Do you need further explanation? :o

It says quite frankly what sony is doing with the lions share of that money

Sony Financial will raise ¥31.1 billion from the sale and plans to invest ¥16.5 billion in a venture with Aegon NV, the second-largest Dutch insurer.

The rest:::
"Sony could use the funds for various options to strengthen its electronics and game businesses," said Mitsuhiro Osawa, a Tokyo-based analyst at Mizuho Investors Securities Co. with an "Outperform" rating on Sony's stock. "A cut in the price of the PlayStation 3 is one option."

Aside from the journalists poorly chosen title for the article... Its a very large leap to conclude that this sale is due to problems with the gaming division.

:D

I don't see Msoft or Toshiba doing that.:DMaybe, but GE (owner of Universal Studios) sold most of their insurance business' over the last 4 years or so. Do you think that was related to the format war as well?:rolleyes:

But he's warm the entire time, is he not?

Well....once he is burnt he could be cooled down and then he could die in hospital due to organ failure or something....

Maybe, but GE (owner of Universal Studios) sold most of their insurance business' over the last 4 years or so. Do you think that was related to the format war as well?:rolleyes:


I am sure GE did it to fund some venture of theirs at the time....it is just a fact that Sony is raising money to fight the twin game and movie format war....why is that too complicated to understand :confused:

Let's test it! We can start a poll to find someone who really sucks, then we will use him/her as a guinea pig to see what happens! :p

Let's try you, you obviously have super powers. :D

"Set a man a fire, and he will stay warm for the night."
"Set a man on fire, and he will stay warm for the rest of his life."

Maybe, but GE (owner of Universal Studios) sold most of their insurance business' over the last 4 years or so. Do you think that was related to the format war as well?:rolleyes:

Sure - isn't everything that ANY company does that is involved the format war a direct correlation to the format war:rolleyes:

I am sure GE did it to fund some venture of theirs at the time....it is just a fact that Sony is raising money to fight the twin game and movie format war....why is that too complicated to understand :confused:

Because it is Sony. ;)
If it were Toshiba, there would be 5 threads running, claiming that BR is killing HD DVD, and that HD DVD would be dead in 6 months...no...18 months...no...can't keep up, they keep moving HD DVD's time of death on us. :D

Now you all are CFA's too?! This gets more & more ridiculous each day, lol.

Sony has more problems than the PS3 and Blu-ray. They have lost a major share of the HDTV market to Vizio, a low cost HDTV brand sold in the discount stores.

Big companies that have problems with either profitability and/or solvency usually raise cash to improve liquidity. This usually involves selling assets.

As others have pointed out, there are many other reasons to spin off a subsidiary.

Bill

Can't believe Sony's going to sell off their 'Sony Life Insurance Co.' division. They may need it to get some ROI on their next dead format.

Wait... Sony did insurance? Wait, even more amazing.. PEOPLE WOULD ACTUALLY USE SONY FOR INSURANCE ?!? *aghast*

Now you all are CFA's too?! This gets more & more ridiculous each day, lol.


Actually, I am a charterholder. Level 1 in 2004, Level 2 in 2005, passed level 3 in 2006, awarded charter Dec 2006.

I am not an equity analyst, but I work on the street in debt securities.

I am sure GE did it to fund some venture of theirs at the time....it is just a fact that Sony is raising money to fight the twin game and movie format war....why is that too complicated to understand :confused:


GE divested from their insurance arm, selling it to Swiss RE, because it was unprofitable, unlike SNE's arm which was one of their only profitable ones.

AFAIK it's made money for Swiss RE since.

Wait... Sony did insurance? Wait, even more amazing.. PEOPLE WOULD ACTUALLY USE SONY FOR INSURANCE ?!? *aghast*

Sony would own a portion of the insurance company. It wouldn't say Sony on the door. :-)

Sure - isn't everything that ANY company does that is involved the format war a direct correlation to the format war:rolleyes:

Isnt that what you are implying in this thread.

So last year Sony felt this was a great investment (2nd year of birth) - but this year - SELL IT!

You have never bought stocks.... then sold them a year or less later? In any event, did you even take any time to read the article?

I thought owning an insurance company was like a license to print money?:D

T&D Holdings Inc., Japan's only publicly traded life insurer, fell 16 percent this year along with the majority of financial and insurance companies. "Investors are still concerned about the losses from subprime loans.

http://www.escapistmagazine.com/news/view/76590-Sony-Sells-Financial-Stake-to-Fund-Games-Unit

Robbing Peter to pay Paul I see...;):D

Hey, they have to do something to pay for those miscellaneous expenses - Best Buy endcaps, regular payments to beatboy 77, etc. - don't they?

I am sure GE did it to fund some venture of theirs at the time....it is just a fact that Sony is raising money to fight the twin game and movie format war....why is that too complicated to understand :confused:

Because the article actually states what Sony plans on doing with the money?


Sony Financial will raise ¥31.1 billion from the sale and plans to invest ¥16.5 billion in a venture with Aegon NV, the second-largest Dutch insurer.

Is Aegon going into the BD business? :rolleyes:

You have never bought stocks.... then sold them a year or less later? In any event, did you even take any time to read the article?


apparently not

Everybody is worried about subprime somewhere. The big risk is to the portfolios invested in MBS paper using the insurance premiums. If losses are incurred then there might not be enough money to cover required payouts.

However, most well managed insurance companies keep a small percentage of exposed paper, usually senior tranches of MBS. If they do experience losses it will be rather small. Most of the worst stuff, which will experience the worst losses, was bought by people who needed/wanted th returns and took more risks.

Additionally, SNE's insurance outlook wasn't tinged by this problem, it was a money-making division.

I don't know, I think he gets 1st to 3rd degree burns, and dies? :confused:

Hence warm for the rest of his life!:rolleyes:

Isnt that what you are implying in this thread.


Nope - Sony has $10 billion in debt. THAT is not all created by the PS3 or the LPT Battery fiascio. Not even close.

Nope - Sony has $10 billion in debt. THAT is not all created by the PS3 or the LPT Battery fiascio. Not even close.

lol @ $ony.

Microsoft: 21 Billion cash, 0 debt

$ony: 2.8 Billion cash, 10 Billion debt

Speaks volumes on whose management knows how to run a business.

Tons of companies have debt - who cares?

Debt is not a bad thing if it helps fund expansion and profitable operations. Sony has seen its net income increase quite decently over the last couple of years, and this year should be its best in a long, long time; those numbers include the debt servicing.

I think too many people are used to referring to MS' financial situation - and actually don't know much about the majority of companies.

Anyway I want to point out one more thing as well - something pretty fundamental. The article gets it completely wrong - Sony isn't selling their financial services unit, they're spinning it off. That means an IPO. Sony will still be the majority stakeholder in this 'company,' and the primary beneficiary of its operations. It simply means a stake will be sold, and the latent value monetized. This is *not* an out-of-the-ordinary move when a company has a valuable non-core business they run, and is primarily a way of having that value reflected in the share price as well as a way to raise liquid reserves.

Now you all are CFA's too?! This gets more & more ridiculous each day, lol.

Quoted for Truth! It's so funny to see everyone talking about financials and deals in an AVS SCIENCE forum. Great stuff!

Did not know so many corporate accountants posted here at AVS. If I ever start a multi-billion dollar business I will come here for my advice:)

lol @ $ony.

Microsoft: 21 Billion cash, 0 debt

$ony: 2.8 Billion cash, 10 Billion debt

Speaks volumes on whose management knows how to run a business.

Completely different businesses. Try comparing Sony to another CE company.

Because it is Sony. ;)
If it were Toshiba, there would be 5 threads running, claiming that BR is killing HD DVD, and that HD DVD would be dead in 6 months...no...18 months...no...can't keep up, they keep moving HD DVD's time of death on us. :D

So true, they would "sig" it and post at random to make sure everyone reads it