[Leica] Abandoned Harvester factory

[ricc at embarqmail.com (Ric Carter)]

jay--

do i remember a time when the world did not revolve around the stock market 
and big bankers?

or was i just too young to see it?

ric


On Jun 2, 2011, at 4:27 AM, Jayanand Govindaraj wrote:

> I remember doing International Harvester's demise as a case study - what
> killed the company was bad financial management, nothing to do with the
> products. It is a real cautionary tale, but the world forgets these lessons
> very fast. It was caused by a CEO, Archie McCardell, piling on debt in good
> times to boost earnings per share (EPS) by diversifying into unrelated
> areas, all for increasing the share price to maximize his bonus - 
> encouraged
> by every Investment Bank in sight. The contrast was provided by John Deere,
> who raised equity in the good times, therefore protecting themselves 
> against
> a market downturn in the future, in exchange for reduced EPS and
> consequently lower share price in the short term. I need not tell you which
> company was the darling of Wall Street at that time! Well, we know now 
> which
> decision was correct, don't we? As is always the case in this sort of
> bungling - if the diversification drive had taken place with equity the
> company would probably have survived, though McCardell's bonus would not
> have - the workers are the ones who suffer, seldom the senior management.
> Remember this is a tale of the late 1970s and not 2008!
> 
> Exactly the same problem caused the recent recession, only it was 
> individual
> balance sheets that had sky high leverage, and not corporations - except 
> the
> banks, of course, who did but were bailed out.
> 
> Cheers
> Jayanand
> 
>