On 11 Dec 2004 09:52:57 -0800, email@example.com wrote:
Actually I'd say Forbes is quite in tune with modern practice and in
this case I believe they have called it correctly.
You'd think so, wouldn't you?
Sadly, in many cases you'd be wrong. Such mergers, buyouts, etc. are
all too often undertaken as a way to get the value _out_ of the
company rather than to add value to it.
This isn't at all uncommon, although it appears to be primarily a
post-WWII phenomenon. One of the things that finally killed pulp
magazines was that the major distributor was cannibalized in exactly
The people who now control Sears are not retailers and I doubt
seriously they have much idea how to turn around a company as troubled
as Sears. After all, K-Mart hasn't exactly been soaring under their
leadership. True, it is out of bankruptcy and showing a profit, but
much of that is a result of the restructuring that was done in
bankruptcy, not major improvements in their performance.
OTOH Sears is still sitting on a lot of prime suburban real estate,
acquired 40 or 50 years ago at low prices. That makes it an attractive
target for cannibalization.
The question, of course, is 'optimal for whom?' (Or 'who', but let's
not go there.) For the company, or even for the stockholders in
general, selling off the real estate and folding the company might not
be optimal at all. However the people driving things at Sears/KMart
are not average stock holders. They are traders who are used to making
money buying and selling things rather than by building and running
businesses. From their standpoint they believe the maximum ROI lies in
tearing Sears apart and selling off the pieces.
Projects expand to fill the clamps available -- plus 20 percent
On the other hand, given the decline of the department store on one end,
and Walmart eating everyone's lunch on the discount side, liquidating
the company might be in everyone's best interest. Clearly the consumers'
aren't going there.
As another pointed out, Sears (or at least someone with some influence!) has
actually been listening to what's happened to the Craftsman trade name by
the schlocking-down of the tools that made it what it once was.
Now you find "Craftsman" and "Craftsman PROFESSIONAL" tools side by side on
The "Craftsman" tools are those we all deride -- the Ryobi re-dos and the
Blank & Fletcher foul-ups.
The CRAFTSMAN PROFESSIONAL line is another story! Those suckers cost (a
lot) more for good reason: they're actually substantaial tools. Those new
table saws by Orion (22124 and the others) and the 15" Lathe and the
Planer-Jointer are prime examples that Sears is really making its way back
to providing real value over the long haul while remaining "right around the
corner". That "being right around the corner" is going to continue to mean
a lot to the final purchase decision -- especially when the machine quality
is "right there" up against the mail-order competition.
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