Should You Buy, Sell, or Hold Sony Stock on Rumors of a Chips Business Spinoff?

Sony (SONY) is in the news following Bloomberg’s report that the Japanese electronics giant could split off its semiconductor business, Sony Semiconductor Solutions, as early as this year. The firm would offload most of its interests in the chip unit to shareholders and keep a minority stake, sources close to the situation told Bloomberg. Even so, implementation is uncertain and subject to revision. Investors should note that this development reopens an idea originally championed by activist investor Dan Loeb’s Third Point several years ago.

The possible split of Sony’s semiconductor business would represent a major strategic change. The semiconductors play an integral role in Sony’s image sensors and overall consumer electronics business, but shareholders have repeatedly contended that the division is undervalued as part of the overall conglomerate.