Sony Slates Subsidiary Share Selloff, Sees Surge in Profit

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Somewhat unexpected news hit from Sony earlier today, saying that it not only planned to sell off some of its stake in its consolidated subsidiary, M3 Inc., but it also would post a pretty sizable operating profit for the year through March 2013 as a result of the sale.

Sony's plan to sell off shares in M3 Inc., a marketing company, represented just six percent of its total stake in the subsidiary, but by doing so, would allow Sony to post an operating profit for the year amounting to 115 billion yen (around $1.23 billion U.S.). Sony's statement detailing the sale explained that the sale was regarded as a rebalancing of its assets and its business portfolio.

Given that Sony hasn't exactly been having a good run of things of late by way of its profit margin--the 2011 financial year spotted record losses for Sony--being able to post an operating profit is likely a welcome development indeed. This is compounded by its big event slated for later today, and an operating profit would likely give Sony something to crow about during the same--especially if it's also planning to unveil new PlayStation hardware, now regarded as being very likely to happen--putting a little extra bolstering under the sagging spirits of shareholders.

Still, the effect will have to be somewhat limited, especially if the investors get the idea that Sony is "eating the seed corn," so to speak, trying to inflate the profit numbers by selling off stock in current ventures, thus reducing its ability to operate next year, and reducing the overall impact the company can have in the future. If Sony's shareholders get to thinking this is a desperation move, then the move may somewhat backfire and Sony shareholders may start running for the exits. Indeed, right now, Sony’s stock is trending slightly downward and is off the day's highs.

Naturally, this could change with the rest of a trading day to go, but it's not looking terribly optimistic, especially with the launch of the next-gen gaming system likely to happen in a matter of hours. It's worth taking particular notice that Sony's only selling six percent of its stake in the operation, which is hardly an "eat the seed corn" move. But that just means it's got six percent less to work with next year, which could be regarded as a desperation move to perk up the bottom line with a quick infusion of cash.

Sony's overall master plan here, of course, is pretty much only known to Sony. But possibilities certainly abound, some bright and some more sinister. Only time will tell just which possibilities make the jump to reality status, as there's cause for both optimism and alarm to be had today.




Edited by Brooke Neuman
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Contributing TechZone360 Writer

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