"It was like if Circuit City had purchased Radio Shack."
Better analogy would be as if Kmart purchased Sears, which they did back in '04, to pretty much the same outcome.
Sometimes I think terminally ill companies thrash around like this to generate transactional cash flow for friends and family, to help the leadership get jobs elsewhere after the ship finally sinks.
> Sometimes I think terminally ill companies thrash around like this to generate transactional cash flow for friends and family, to help the leadership get jobs elsewhere after the ship finally sinks.
What do you think the rest of the time??
This is exactly what they do. A company doing as badly as these in the 19th century would have been wound down and the remaining assets distributed to stockholders. Today they take on debt, "restructure" endlessly, file for bankruptcy protection (usually more than once) and churn, churn, churn to keep those senior managers employed just a little bit longer. Meanwhile the stockholders, who would have taken a moderate loss under a liquidation scenario, instead get wiped out completely. Directors these days are basically extensions of senior management; they'll approve of pretty much anything the CEO wants to do as long as it's not (a) winding down or (b) an indefensible violation of their legal obligations. M&A is a very popular way to be seen to "do something"; it's a standard act in the CEO's keeping-your-job-for-a-while-longer playbook. In this case, it also allows the next CEO to use the blame the last guy tactic along with the big "one-time" writedown to buy himself some more time.
I don't know that Microsoft, which still continues to have products like Windows and Office that generate lots of money, really falls into this category.
Eventually a company/conglomerate is big enough that sharing a financial structure means little. GE, for example, has locomotive making divisions sharing a finance structure with MRI software divisions. Claiming they really have anything in common is pointless, like saying Caterpillar and BP are the same because they share the NYSE as a common financial structure.
Given that, its an open debate if Microsoft is big enough, conglomerated enough, internally disconnected enough, such that success or failure in monopoly Office app licensing has anything to do with console gaming hardware. If they share little more than common ownership and financial structure, then we're back to "Caterpillar and BP are the same because they both have owners/shareholders on the NYSE" argument.
If MS went poof and spun off all its divisions, would there really be much effect on the divisions, other than the losing ones would run out of cash and the winning ones would have way too much cash?
I guess another bad analogy is GE is just a big mutual fund that 100% owns dozens of completely unrelated large companies. And its a fair claim that MS is the same although obviously much smaller.
All standard 21st century investor behavior. Double or nothing all the way. A CEO trying to quietly wind down a company is unlikely to be given time to do so. Unless they have the backing of an "activist" investor, in which case the unions will scream bloody murder about "vultures" ruining America.
Sears Holdings was basically a hedge fund that happened to own Sears and Kmart. You'd have to admit that prior to the recession it was looking pretty good, having enjoyed a 10x run in their share price.
Better analogy would be as if Kmart purchased Sears, which they did back in '04, to pretty much the same outcome.
Sometimes I think terminally ill companies thrash around like this to generate transactional cash flow for friends and family, to help the leadership get jobs elsewhere after the ship finally sinks.