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Treating them above market or not, Amazon acquired the company for billions and not because Whole Foods was doing badly.
by Joakal 9y ago
Treating them above market or not, Amazon acquired the company for billions and not because Whole Foods was doing badly.
- emodendroket 9y agoIt says right in this article (and in others that have been published recently) that they were under pressure from investors.
- VT_Drew 9y agoGood old investors, so short sighted, they only care about the next 3 months. Whole Foods probably would have been better off as private company, especially with the culture they were trying to create.
- ThrowawayR2 9y ago> Good old investors, so short sighted, they only care about the next 3 months. Yeah, darn those investors. How dare people with pensions, 401k's, IRAs, and other investments expect some kind of return on their investment? It's disgraceful. /s EDIT: The sentiment against investors is rather ironic considering the amount of equity collectively held by HN readers.
- kesselvon 9y agoshort-term boosterism is the cause of more than a few problems in our economic system
- ThrowawayR2 9y agoThere is always a need to balance both the short term and the long term. I rather doubt anyone who has retired and is drawing on their retirement investments will be thinking long term since, to be morbid, they simply aren't going to be around in the long term.
- emodendroket 9y agoSomebody who is currently living off of their investments should probably have moved most of them out of volatile investments like stock anyway.
- emodendroket 9y agoI don't think you can really equate "activist investors" with workaday people with IRAs.
- refurb 9y agoTake a look at how much of a company's stock is owned by institutional investors. A lot of that money comes from people's pensions, 401Ks, IRAs, etc.
- emodendroket 9y agoI'm not disputing that; what I am disputing is that such investors are basically the same as Carl Icahn.
- chc 9y agoThe idea that I can't criticize pathological behaviors by investors because I myself invest in things makes about as much sense as saying I can't criticize bad US policies because I live in the US.
- pstuart 9y agoLove it or leave it! /s
- lostlogin 9y ago'Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists.' Bush.
- bluGill 9y agoYou are the investor causing the pathological behavior. A very large part of wall street is investors like you that just have a little bit in their retirement accounts. Do you vote the proxy for all the funds in your 401k? Do you understand how your vote affects the above - it all does.
- s73ver 9y agoWrong. I am not telling any company to treat their employees like crap to squeeze an extra penny of profit out of them.
- bluGill 9y agoBut you are because you own the fund that in turns owns the company. It might not be your intent, and you might not have enough of a vote to stop it, but you are still doing it. (sort of like Americans opposed to the current foreign policy are still at fault for it)
- s73ver 9y agoNo. I reject your idea in its entirety.
- airza 9y agowho the fuck has a 401K and is interested in short term returns?
- jdmichal 9y agoYou know at some point the 401k is supposed to be paying your bills, yes? That's its raison d'être. When you have investments paying your bills, you might understandably be focused on those investments yielding some immediate returns. Maybe to pay for that leaky roof, or broken down AC...
- popinman322 9y agoAny short term returns from the market should be remarkably small per individual managed by a firm. It's the long term growth that you're banking on when you prepare for retirement years in advance.
- emodendroket 9y agoWhy in the world would you have more than a token amount of assets in stock if you are nearing or in the middle of retirement?
- ghaff 9y agoThe fund managers for the funds in that 401k.
- anigbrowl 9y agoYour comment rests on the implicit premise that investors were getting no return worth talking about. There's a big space between not getting and adequate return and squeezing out every last bit of profit.
- landryraccoon 9y agoI think your comment is a non-sequitur. I am highly invested in my 401K and IRA but I would much rather have returns over the next 10 years than the next 3 months. If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.
- triangleman 9y agoThey had their chance, the culture did not help keep the company above water. Noted by a friend who used to work there: - They treat each store (and each department within each store) like its own separate business, which is great for teaching individual managers about waste, efficiency, profit/loss. However they can't bother to get together on a corporate level and combine purchasing power on most things. Every store has to work on making a deal on their own merchandise, separately. - In a show of solidarity, all employees, whether floor workers or corporate IT, must work holidays and instead have floating holidays for time off. Then predictably there is a seniority effect where the long-term workers get to have their holidays and the recent hires have to come in on a completely useless day and stay till 3 or 4 when the management "lets" them leave. Also I recently shopped at their 365 store and it's a great store with better prices, but their website sucks and my name comes up as "firstname lastname" on their computers. If Amazon can knock some sense into their IT, that would be a huge win.
- rayiner 9y agoA lot of time when companies like that get acquired, someone is hoping to profit on the difference between the purchase price, and the value of the company when the management culture switches to wringing every last bit of productivity out of employees. Amazon might have a more strategic goal, but the above strategy is a common one.
- euroclydon 9y agoWell Amazon is not sitting on hordes of cash, just looking to diversify. This is a strategic move for them. I'd say the odds are greater than 50% that WF culture, and in turn the store experience, gets worse. I mean, Amazon had the choice to not turn their website into a flea market, and we know how that went.
- hosh 9y agoNot sure, but hearing about how Amazon is running into trouble with their grocery stores, they might want to learn something from Whole Foods (similar to Zappos). There was also an article that talked about the brilliance of Amazon biz organization. Business units are set up like API interfaces, ones that serve both internal needs as well as external customers. The author's claim is that it helps trim the fat, with what was normally internal services being exposed to market forces. It makes me also wonder about WF's fate from that perspective.
- toomuchtodo 9y agoWF most likely will fail under Amazon (if WF must adapt to Amazon's business methods), opening the market for local competitors and similar national chains to absorb that market share. Great opportunity for Aldi on the low end and Trader Joe's on the high end. Groceries are not APIs.
- pm90 9y agoI don't know. WF does have a very loyal base of users. Unless Amazon fucks with them majorly, I don't see it changing very much. In fact, with less pressure from activist investors to cut back on expenses, they might actually get more resources to experiment with new concepts. If money weren't a matter, I would love to shop at whole foods: shopping for groceries seems more of an experience there than at other places. Maybe using Amazon's superior operations management would let them lower prices even further attracting more regular customers.
- sbarre 9y agoHow many of those billions will the average employee get to see?
- H1Supreme 9y ago-$1,000's, most likely. Unless they have good contracts (which they probably don't).
- markshead 9y agoIs there any reason they would get a different amount per share than other shareholders? I'd assume it would only depend on how much stock they have obtained either by purchasing it from the market, using the stock purchase plan (where they can buy it for 85% of market price if they agreed to keep it for 2 years), or the stock-grants that were given to employees.
- s73ver 9y agoWell, for one, the employees are a huge part of why those shareholders get any returns in the first place.
- Steve44 9y agoAnd the shareholders are [usually/pretty much] the entire reason there is a company there for them to work at and potentially hold some shares in. There are two sides to that.
- s73ver 9y agoI disagree with that statement.
- ProAm 9y agoAnd the employee's get a paycheck in return...
- markshead 9y agoAnd the ones who bought stock (including those that did so at the 85% discount) will get the value of their stock. However, shareholders aren't guaranteed any returns. If they bought their stock in 2013 they lost money. Employees who bought stock with the 85% discount won't be quite as bad off as non-employee shareholders. Imagine suggesting that any employee who was hired when the stock price was higher than the selling price now had to pay money to those who were hired when the stock price was lower. Fortunately, employees are not held liable for the valuation of the company at which they work. If they WANT to participate in that risk and reward they can buy stock--sometimes at a discount like Whole Foods offered.
- giardini 9y agoWhole Foods stock has been down for years. Their year-to-year same store sales fell last year. The entire grocery industry is in a slump: https://www.google.com/search?q=whole+foods+stock&oq=whole+foods+stock&aqs=chrome.0.0l6.3245j0j8&sourceid=chrome&ie=UTF-8 https://www.google.com/search?q=whole+foods+stock&oq=whole+f... http://www.chron.com/business/article/Kroger-s-darkening-outlook-drags-down-peers-as-11222875.php http://www.chron.com/business/article/Kroger-s-darkening-out... Amazon buying WF will likely have two results: 1) As long as Mackey can run the company WF employees will stay. Once he leaves (likely soon), they will leave. This is an opportunity for some other investor with Mackey's same principles to buy up WF's human capital. For example, Starbucks will benefit b/c former WF employees make good baristas. 2) Amazon will be left with the infrastructure of WF, primarily the real estate, warehouses, storefronts and whatever slice of humanity Amazon hires to replace former WF employees. So maybe Amazon wants WF primarily for the locations, the real estate and the warehousing capacity. They're getting a good price by buying while WF is at a low. Amazon is simply too much - time for the monopoly-busters to break them apart.
- mindcrime 9y agoAmazon is simply too much - time for the monopoly-busters to break them apart. What exactly does Amazon have a monopoly on? Selling books? Nope, Barnes & Noble and Walmart and others compete there. Cloud computing? Nope, check Google, Microsoft, IBM, Racksapce, Linode, etc. Selling other random stuff on the net? No, Target, Walmart and a bazillion specialty sites also do that. Groceries? Obviously not. The idea behind anti-trust / monopoly law is generally to prevent a company from leveraging a monopoly in one area to gain excessive control in another area. I don't see how anyone can argue that Amazon are doing anything like that. Being big and successful is not, in and of itself, wrong.