I am at least aware that I’m a broken record …
News item today about 1,000 layoffs to be announced at Oracle, pursuant to Siebel acquisition. Buried in the story: Oracle has now spent about $20 billion on PeopleSoft and Siebel (synergy, synergy, synergy) … and its stock price is down about 15% from 2004.
Two days ago Carl Icahn and Lazard produced a 343-page plan for busting Time Warner into four pieces. The report contends that such a move would jack TW’s stock price up nearly 40%. Who knows? What we do know is that TW, in constant pursuit of “synergy,” has seen its stock stall for the last four years.
So, I ask again, why do these ego-maniac CEOs keep merging (think Jerry Levin at Time Warner)? Why do their boards sign off? Why does Wall Street go along? (I guess at least the later is obvious in one word … fees.)
The only saving grace: By merging, the Big Guys make themselves more vulnerable to incursions from the outside (think Big Pharma mergers and the subsequent biotech assault), which in turn speeds the wholly beneficial process of Creative Destruction—so imperative in turbulent times. I guess I can tolerate the Big Mergers more if I just think about them as unassisted suicide.