Live Reported From the Stock Exchange: GOOG (-16%) - YHOO (-17%)
So, this will be continued. The expectations are set!
The one dollar and twenty two cents net earnings ($ 1,22) was (way) below the expectations. And so the stock prices (GOOG: $ 393) fell back 9% today. Both stocks quote below the level of December when the live reporting began; GOOG (-5% from $ 415) and YHOO (-15% from almost $ 41).
These are however absolute returns. The stocks are setup in a race between, but there is no benchmark set for either of them. Lets park that for the next time and we can take the Nasdaq for it (current index: 2301). Also, in order to compare (the competition between) companies you need to analyse the difference in focus. (To be elaborated...)
There are two ways in which a growing company can grow even more and there is only one way in which a non-growing company can grow; the first by buying others and by autonomous growth. Buying other companies is an interesting growth strategy, because the company can leverage on the growth of the stock price.For companies that nearly grow cannot use that possibility.
But what happens when you buy your own competitors? This is the topic of this live reporting. Most companies have a competitive attitude towards the market, to their environment. But what about the internal market; the market inside the company?
Think about a company that is growing on behalf of buying other companies; the competition. Once these companies are absorbed, they will only support the growth of the main (global) company if these new ?satellites? are moved into the same strategic direction. If the companies continue to compete internally the net benefits will be less than the sum of the parts.
If you are ambitious to the challenge that the individual parts of your company cooperate rather than compete (and this holds for both companies that are taken over, as for internal departments), than you should use different management principles.
This could start for example by withdrawing some freedom the new satellites have experienced so far, in order to avoid cannibalism and to prosper future synergies.
Hans Bool
Hans Bool is the founder of Astor White a traditional management consulting company that offers online management advice. Astor Online solves issues in hours what normally would take days.You can apply for a free demo account.
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