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"In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called the dumbest idea in the world, the situation is the reverse.
by mixmax 15y ago
"In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called the dumbest idea in the world, the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services."
Maybe the real genius of Steve Jobs was to actually spend his time running Apple, creating real products and services instead of playing the expectations game with investors and shareholders.
- WalterBright 15y agoJobs certainly wound up maximizing shareholder value. Maybe the shareholders aren't so easily fooled.
- yuhong 15y agoBut the key thing is that Jobs did it the right way instead of meeting short-term expectations.
- alexqgb 15y agoExactly. Healthy profits are the (inevitable?) result of a well run business, which requires attention being paid to a variety of factors, not just the bottom line. Failing to understand this, and focusing exclusively - or even disproportionally - on the bottom line, is likely to improve it in the short run, diminish it in the medium run, and destroy it in the long run.
- WalterBright 15y agoTake a look at the P/E values for various companies. Ones with a high P/E are clearly those where the shareholders believe there is long term growth in the profits, and are willing to forego current profits to get it. I really do not buy into the popular idea that shareholders are only interested in short term results. If that were true, then marginally smarter investors would regularly make themselves huge fortunes by buying undervalued stocks.