4 ms·

For investors winding down and returning money fast might be preferable to a company without profits.

nullc 3y ago
Sure, and for a period corporate raiders took advantage of companies like that-- but standard defenses against raiding have become well known and widely deployed. Like life learning how to make cellulose suddenly the landscapes were littered with the husks of things that nothing knew how to digest. But the value to society at large isn't just a profit (much less an ever growing profit). It's good that we have businesses which simply satisfy the involved parties (their customers, their employees, and their owners)-- even if they don't perform well on any external metric of efficiency.
- RandomLensman 3y ago
  Investors certainly look at winddown scenarios for companies not performing. Sometimes broader considerations win out, sometimes a change in management is all that is needed, sometimes more aggressive things happen.
- fallingknife 3y ago
  How is there value to society in zombie corps that no longer make a profit?
  - pjc50 3y ago
    The employees are still getting paid! Quite often the product is genuinely useful. It may be a beloved brand. Companies don't vanish the microsecond they cease to be profitable and nor should they. It's only when they run out of cash. I don't think it's anyone's job to be "euthanizing" low-profit businesses that might recover if there is a turn in the economy. The "zombie" concept is economically illiterate. Occasionally you will get a private equity firm doing this and the result is widely unpopular (Toys R Us, Maplin, etc)
  - rightbyte 3y ago
    The employees and customers are surely a part of society. More offent than not, not making enough profit is overreaching the profit goals to justify unfair stock prices. And the executives and board make bad gambles since they lose the owners money if they lose and win the owners money of they win.

Sure, and for a period corporate raiders took advantage of companies like that-- but standard defenses against raiding have become well known and widely deployed. Like life learning how to make cellulose suddenly the landscapes were littered with the husks of things that nothing knew how to digest. But the value to society at large isn't just a profit (much less an ever growing profit). It's good that we have businesses which simply satisfy the involved parties (their customers, their employees, and their owners)-- even if they don't perform well on any external metric of efficiency.

RandomLensman 3y ago
Investors certainly look at winddown scenarios for companies not performing. Sometimes broader considerations win out, sometimes a change in management is all that is needed, sometimes more aggressive things happen.
fallingknife 3y ago
How is there value to society in zombie corps that no longer make a profit?
- pjc50 3y ago
  The employees are still getting paid! Quite often the product is genuinely useful. It may be a beloved brand. Companies don't vanish the microsecond they cease to be profitable and nor should they. It's only when they run out of cash. I don't think it's anyone's job to be "euthanizing" low-profit businesses that might recover if there is a turn in the economy. The "zombie" concept is economically illiterate. Occasionally you will get a private equity firm doing this and the result is widely unpopular (Toys R Us, Maplin, etc)
- rightbyte 3y ago
  The employees and customers are surely a part of society. More offent than not, not making enough profit is overreaching the profit goals to justify unfair stock prices. And the executives and board make bad gambles since they lose the owners money if they lose and win the owners money of they win.