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Perhaps they should be keeping management on a tighter leash if the only likely outcomes they're capable of are "vanity purchases that destroy value" and buying
by hakfoo 8y ago
Perhaps they should be keeping management on a tighter leash if the only likely outcomes they're capable of are "vanity purchases that destroy value" and buying back stock.
If you've got mountains of free cash, there are a lot more exciting opportunities out there. You can afford to make higher-risk/higher-reward investments. You can buffer yourself from that next surprise recall/product failure/fulfillment problem. You can make sure you have a stake in anything that looks like it could someday be an existential threat.
- mercutio2 8y agoRemoving liquid assets from the balance sheet is the main way boards maintain a tight leash. It’s one step beneath firing an executive. There’s a reason (many) successful companies don’t just go off and become massive conglomerates attempting to pursue every idea any executive has. Areas where the board feels it has a competitive advantage, an investment opportunity, and enough management capacity to oversee the new investment are not, in fact, dime a dozen.