[rollei_list] OT Public Companies (was Re: OT Kodak out of Digital?)

  • From: Eric Goldstein <egoldste@xxxxxxxxx>
  • To: rollei_list@xxxxxxxxxxxxx
  • Date: Wed, 02 Aug 2006 18:20:09 -0400

Richard Knoppow wrote:

I know your response is meant to be ironic but you've basically
encapsuled the difference between running a Fortune 100 company 50
years ago and running one today. The concept of a core business is
more important today than is was then. The world has turned much
flatter, markets are much broader, and the internal and external
customer's requirements have changed substantially. So viable business
tactics and production/distribution/marketing strategies must
substantially shange as well...

BTW GE is a well-diversified company with several discrete core
businesses that include internal manufacturing. By most traditional
measures it is the most successful stock in the history of the S&P
500.

Eric Goldstein

I think we mean different things by core business. My point was that GE is very diversified. Probably the largest share of its income comes from GE Capital which is pretty far removed from GE's original business. However, they still make generators and lightbulbs.
I don't know about running a Fortune 100 company 50 years ago but I think the whole concept of what a business is has changed. Companies like GE have become sort of branded investment services. Their orientation is toward managing their investor's money rather than making a product. This is a very critical difference because it changes the emphasis from the market for products and services to the financial market.

GE is unusual in that is does have several discrete non-integrated core businesses and is for the most part successful at running each of them. Westinghouse, Xerox and any number of other corporations tried the same thing and failed enormously. Yes the capital business was/is very lucrative, ask General Motors (it kept them afloat for a decade).

These days a Fortune 100s sole responsibility to it's shareholders is to show above average quarterly growth (for the most part profit, but not always). That is where it begins and ends; shareholders are for the most part disinterested in the 10 year or even 5 year plan for the corporation. The classic case study for what we are talking about is Berkshire Hathoway, which when I was a boy was a shirt maker...

BTW I think this is a terrible turn for the worse. When I entered the work force, there was still room for ideas that had social utility as well as profit potential. I was a corporate "do-gooder," developing syndicated broadcast projects that delivered worthwhile (seemingly) content which was corporately sponsored under the guise of cause-marketing. We made hundreds of millions of dollars for both the corporation and the sponsors. But such projects would not be bought into today because they are labor intensive and broadcasters for the most part have downsized to the point where such product could not be produced internally, would not be accepted from a studio/syndication partner unless it came presold, and would not be produced/presold by them because the same manpower could be applied to producing reality programming and with higher margins and lower costs.

Hi ho


Eric Goldstein
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