Sony Hopes For ISP Tracking Stock

Looking for a catalyst to bolster its sagging stock value, Sony Corp. Tuesday announced intentions to get its Internet service provider arm, So-Net, listed as a tracking stock on the Toyko Exchange.

The ISP has been enjoying a successful year and Sony officials are anxious to see how well it performs on its own. Sony itself has been experiencing a lower-than-normal dip in stock value this year, mainly attributable to an industry-wide malaise in high-tech stocks.

Nobuyuki Idei, Sony chief executive officer, said in a press conference it is his company’s hope to raise its overall value with the spin off of a new tracking stock.

“We think that this will reveal the corporate value of the subsidiary while raising the shareholder value of the group,” Idei said.

Before the tracking stock can be offered on the Toyko Exchange, it needs to pass muster with Sony shareholders. A special meeting of the board of directors in January will consider the proposal.

Japanese government officials and the Tokyo Stock Exchange must also weigh in with its opinions before the stock can go on the market. Although there is no provision in Japanese law for the tracking stock practice, originated in the U.S., Sony officials are confident the government will make allowances.

Sony is looking for any means to bolster it sagging stock value in Japanese and American markets. On the New York Stock Exchange Tuesday, Sony slumped to a 52-week low of 72 – 7/16, a sharp drop from its high of 157 – 3/8 in March. In Tokyo, it closed at a 52-week low of 7,940 yen per share, or about US$72.31.

Information is sketchy on the trading stock’s expectations, however, as securities regulations in Japan prevent Sony officials from divulging information in the U.S., according to Yas Hasegawa, Sony spokesperson.

A tracking stock gives shareholders the dividend benefits to a normal stock, but keeps asset decisions in the hands of Sony management.

Sony officials claim So-Net has a membership around 1.47 million, and has POPs located in many Asian-Pacific Region countries, Europe and the United States.

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