- 10/15/2013 12:47:00 PM
I was reading a great article the other day about some of the issues that a new incoming CEO of Microsoft would need to face. One point that stood out was the following:
Real business model transitions are dangerous. By real transition I don’t mean adding a new line of peripherals or accessories, I mean moving to a new way of making money that negatively impacts the old one. The old money flow might dry up before the new one is able to replace it, causing an earnings trough. For publicly traded companies, this drought is unacceptable. Rather than attempt the transition and face the ire of Wall Street traders, some companies slowly sink into irrelevance. Others take themselves private to allow the blood-letting to take place out of public view. When the curtain lifts some months later, a smaller, healthier outfit is relaunched on the stock market. Dell is a good example of this: Michael Dell gathered investors, himself included, to buy the company back and adapt its business model to a Post-PC world behind closed doors.
Be sure to have a read of the full article, it’s a great read.
The part that is particularly interesting is the observation that companies often delist when they are looking to embark on a business model change.