PlayStation maker agrees to sell 37-story New York City headquarters to investment group, expecting to net $770 million from transaction.
In an effort to bolster its financial foundation, Sony has agreed to sell its New York City-based United States headquarters for $1.1 billion, the company has announced. The 37-story office is located at 550 Madison Ave and will be sold to an investment consortium led by the Chetrit Group.
The deal is expected to close by March 2013.
Sony expects the transaction to net proceeds of $770 million after paying debt associated with the building and other various transaction costs. Sony Corporation and its other businesses, including Sony Music Entertainment and Sony Pictures Entertainment, will remain in the building for up to three years.
Sony shares surged on the news, up more than 12 percent to ¥1,149 ($184) at press time.
@uglypinkmoose That is not the case at all. Sony has been in decline since about early 2000. This was at a time when Sony ruled the roost in certain markets like computer games with the Playstation and portable music players with the Walkman.
However, it has failed to either compete or new entrants have entered the market with similar, better products i.e. iPod and Xbox. It has also seen competition increase in other markets such as TVs, in particular Samsung and LG, who offer similar products but at a lower cost.
Selling the building is probably part of a restructuring exercise meant to reduce costs. Japan's economy as well has seen a number of factors hit it hard including a decline in the yen to natural disasters.
BTW this isn't a rant just type Sony in Google's news search and you will see Sony's downfall documented.
@thequickshooter Nope, just financial stuff. Sounds like they're selling the building and then renting it from the buyer for up to 3 years.
Depends on what you mean by that. I don't think it too unlikely that in the next 10-20 years, Sony could possibly be involved in a merger or be sold outright to the highest bidder. Ever since Korean companies-Samsung and LG- became genuine competitors, Sony's revenues and incomes have been going down for a decade+ now, and they've even lost name brand recognition as being a luxury item compared to its competitors too. They can't beat Samsung or LG on the LCD market, they'd get crushed by Apple on the smartphone market, they don't really have too many options outside of a massive restructuring effort that would make a completely different company altogether. Their business model has essentially floundered, and they're too far behind to catch up. Japan's economy as a whole has been stagnant or recessive even longer with a diminishing population that's becoming less educated. This is likely just the beginning.
And as big as Sony is, it's not TOO big to fail like a Toyota or a Nissan would be. Plenty of other Japanese electronics companies (toshiba, panasonic, etc...) that could absorb parts of Sony. Hell, Samsung got this big only because it absorbed its competitors in the wake of the 1997 Asian Financial Crisis. Except unlike Japan, Korea allowed its chaebol companies to fail instead of keeping its zombie companies.
Well good thing I got my hardware, now I just need to buy up whatever games I might ever want and hope the cap on second hand sales doesn't cover anything prior to PS4...
I dont really see why this is on gamespot? This doesn't really have anything to do with gaming. This is corporate business news.
It has to do with one of the biggest gaming companies in the World. That's why it's on here. Apple, Microsoft, Nintendo and Sony are the big shots when it comes to gaming and media for the masses. How their finances are handles means a lot to gaming companies and other business who invest in Sony.
@KingofCabal This has everything to do with gaming, open your eyes.
Cause they've been bleeding money dry for the past 10+ years. Sony's been a failing company for a long time. They're still massive with plenty of assets, but with no true income coming in, they need to start liquidating said assets just to fund their operation costs. Just to give you some perspective, Samsung's profits are greater than the top 10 Japanese electronic companies' profits combined. Japan's economy as a whole has been.. in not too great of a shape for a very very long time.
This comment has been deleted
@CivilizedPsycho It's business has always been in Japan. They aren't leaving those locations, they are just selling the building and then leasing the space from the new owners. Read the story.
@CivilizedPsycho I thought that too
Sony makes a few billion a year, selling this for around 700 mill is just chump change. They weren't using the building anymore, they consolidated a few departments into other buildings. Why not sell it? Were people expecting Sony to give it away?
If its no longer of use or feasible to upkeep get rid of it rather than holding on and hoping things turn around. They didn't do this spur of the moment; they weighed the uses of the building and decided it was better to sell it now. And they have 3 years to move out on top... why is this even news... its real estate.
To all the people saying this isn't a "desperate move" by sony.. if it is just a "lets make some extra cash to help the shareholders".. then why sell now? the real estate market and prices in the states have tanked, badly. Selling right now is not the best move for profitability. If they were concerned only with making optimal choices/money, they would wait for at least a modest rebound in the real estate market before selling. By the time the 3 year "lease" is up, the value of that property will be much higher(most likely). Also, to sell your own home, just to rent it back from the purchaser is a sure way to LOSE MONEY. Value of the property MINUS rent/lease costs = A LOSS.
Sony and playstation are not going under. People on here(fanboys ahem) need to grow up. the the facts are the facts, sony as a whole are not doing so well, and looking at any way to save or make money in the short term to foster trust in their company for investors. The timing is just really bad.
My wife and i want to sell our home and get a bigger place(another child on the way) but because of the hit real estate has taken(even here in canada), we would be nuts to sell right now, because we would lose a lot of the value. In my current neck of the woods, real estate value has dropped 12-15% in a year alone. Why would we sell now unless desperate? it makes no sense.
PS: lease/rent prices are higher than mortgage prices as the owner has to account for property taxes/insurance/upkeep of the property. So no this isnt a win win for sony.
Well, Kazuo Hirai is the president and CEO of Sony now, not Stringer. Pretty sure Hirai is at the Japan HQ, so they probably don't care as much about the US office anymore.
So its sale and then continue using by renting the building Sony used to own. That is the same strategy Governor Schwarzenegger used in California. It made the dept worse.
I wonder how many jobs will be at lost here. I think that is the worse thing that can come from this news.
@YYankee No loss of jobs its just people being relocated elsewhere... If your job decides to relocate it doesn't mean your laid off, it simply means you're moving.
@d3chu Call me crazy but usually when a company sells a huge HQ there is a loss of jobs.
@d3chu Common sense is not so common.
@d3chu Mhm and it's safe to assume when a company does something like this.
@YYankee @d3chu Of course I'm gonna state an assumption in the opposite extreme. It's the easiest way to show that you made an assumption yourself. My point is you're coming up with a connection by making an assumption, when there is none until Sony comes out and says something about their operations themselves.
@d3chu You're accusing me of making assumptions and then make one yourself (they could move to another building). You said it yourself that operations aren't "usually" affected but if they are how many jobs could be at loss here? The article says that they can stay in the building for "up to 3 years". This means that after 3 years they will have to get out if everything stands as it is now. The connection does exist unless the article is mistaken.
@d3chu It says that they can stay in the building for "up to 3 years". If they don't decide to stay in the building how many jobs will be at loss? Probably a lot and that is more than conversation worthy. Not reading into it too much at all. Jobs are very important.
@YYankee @d3chu No. In a sell/lease back agreement, operations aren't usually affected. At the end of 3 years, they may simply extend their lease again. Reading into it too much.
@d3chu Ok, when did I say anything about "a desperate financial move"? I was just wondering how many jobs will be at loss here. I see in the article is says that they will be in the building for another 3 years but what about after the 3 years? You don't think any jobs will be lost here?
Content you might like…
Users who looked at this article also looked at these content items.
Avalanche Studios co-founder says developer's ambition is for action, not moments that make players cry; steampunk-style game on hold. Full Story
- Posted May 15, 2013 6:33 am PT
4A Games creative director Andrew Prokhorov thanks Jason Rubin for telling the studio's story, but says, "We deserve the ratings we get." Full Story
- Posted May 16, 2013 12:44 pm PT