Yamaha Shuffles Ownership Stakes To Sharpen Musical Instrument Focus
In a somewhat confusing maneuver, Yamaha Corporation will dump part of its stake in Yamaha Motor Company to focus on its core business of developing musical instruments. Yamaha Corp. makes musical instruments and Yamaha Motor makes motorcycles. They are set up as different companies, but each owns a piece of the other.
According to a Yamaha Corporation representative, Yamaha Corp, which owns a 22.7% stake in Yamaha Motor, will sell a 7.8% stake in the motorcycle company for Â¥63 billion ($520.3 million) by the end of this month. Then in early 2008, Yamaha Motor will buy up to a 5% stake in the musical-instrument maker on the open market to strengthen the two companies’ corporate value under the Yamaha brand. The whole thing is a confusing mess to us, but the reason behind the stock dance is to infuse Yamaha the instrument maker with Â¥40 billion, which is why we care. Now of the the 40 billion, the company stated it will use Â¥12 billion to pay some type of dividends over the next three years and Â¥18 billion for buying back its own shares. That leaves Â¥20 billion to invest in its music business.
The Future: What will Yamaha do with Â¥20 billion infusion? That’s a good question, and one that investors are pondering as well. Hopefully, they’ll use some of the capital for R&D, that will generate new product innovations. However, if they do premier new technology, they should stick with it, unlike some of their other introductions that have perished from neglect. In addition, Yamaha should use some of the funds for marketing, especially online where they can precisely target each product niche. Speaking of the internet, Yamaha’s website is about as exciting as a wet napkin, and could use a complete overhaul.