The pressure is on for Sony's boss to deliver a bold performance in 2019. Since CEO Kenichiro Yoshida began in April, he's boosted earnings at the Japanese video games to movies group, which is worth $65 billion. But he needs to let go of a loss making handset unit and spin off the chips business.
Hesitate and hedge funds will make a cameo in Sony's remake. I'm Reuters Breaking Views's Robyn Mak in Hong Kong. Shareholders should be pleased with Yoshida, but not impressed. Yoshida's predecessor sold the laptops business, cut costs and ended a streak of heavy losses. Under Yoshida's leadership, his PlayStation division, and music and movies are powering earnings.
Sony now expects a record operating profit of more than $7 billion for the current fiscal year. One way to fix a drag would to be to make a quick exit from smart phones. Sony is scaling down that business and writing off some assets, but it's still trying to hit a 2020 profit target for phones.
A bolder and welcomed move would be to spin off semi-conductors which have questionable strategic value and makes the PlayStation money makers like God of War and the music catalog that spans Queen to Beyoncé. If Yoshida holds back, it could invite some new stars into the spotlight. Hedge funds like Paul Singer's Elliot and Hong Kong's Oasis, have been eyeing under performers in Japan.
Hedge funds will be watching Yoshida's next act.