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Merger madness rarely pays off, so why do firms still make these deals?
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Dixons actually announced good amount of profit in their trading statement. So business doing good yet people losing jobs!
They announced that "underlying profit" would be at the "top end of market expectations" in the region of £150m-£160m.
The key phrase would be underlying profit. Dixons made an underlying profit of £82m in 2012 and £95m in 2013. However in both years they actually made a whacking loss when all the 'non-underlying' things were taken into account.
So I wouldn't get too excited.0 -
They announced that "underlying profit" would be at the "top end of market expectations" in the region of £150m-£160m.
The key phrase would be underlying profit. Dixons made an underlying profit of £82m in 2012 and £95m in 2013. However in both years they actually made a whacking loss when all the 'non-underlying' things were taken into account.
So I wouldn't get too excited.
IIRC, the 'non underlying things' were long-term lease costs. Big fat fixed costs that the companies that were destroying Dixons, i.e. internet sellers without big fixed costs, didn't have.
In the 90s when commercial property was cheap it looked like a great idea:
"What's that coming over the hill,
Is it a Black Swan? Is it a Black Swan?".
Dixons got done over by not realising that there was something that was basically unknowable that would destroy their business model 20 years later.
That's Capitalism Folks!!!!
Just remember when Dixons were signing up these deals, Carphone Warehouse was just getting going so perhaps the rise of one has mirrored the decline of the other. Net/net perhaps there is no gain or loss of jobs.0 -
IIRC, the 'non underlying things' were long-term lease costs. Big fat fixed costs that the companies that were destroying Dixons, i.e. internet sellers without big fixed costs, didn't have........
It's all sorts of things; asset impairments, goodwill write offs, kitchen sinks, Pixmania (value of brand name now recognised as being worth £nil), the Italian business, the Greek business.....0 -
Net/net perhaps there is no gain or loss of jobs.
That is pretty much it. Society benefits from an efficient business where as on the other hand employing everyone to dig ditches will employ us all but make the nation poorer.
Mergers takes care of a competitor, they favour scales of economy and that can mean less people are needed. It appears bad on the surface but its best long term not to make expense or costly products if its unneeded.
One day the Lloyds Hbos deal will pay off I think but obviously it was a disaster in the short term. The main thing is that they adjust the whole group to be less wasteful while serving the same amount of customers and business, I think the present CEO can do it0 -
In a market economy there always has to be compromises between producer interests and consumer interests. We all want freely available multiple choices of value for money, quality goods. We also all want cast iron job security and good pay, perks, and pensions. We also want technological progress, and the ability to follow fashions and fads as they come and go. Sorry, can't have all that without some eggs getting broken from time to time, and sadly that sometimes means people's jobs.
The proven alternative is the old Soviet system where everybody has a guaranteed job (or non-job), but they queue for bread every day and there's a six year waiting list for a car for the few who can afford one.
Does anyone really believe that there's a third alternative that would work ?No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
ruggedtoast wrote: »My money is on weak and venal.
Hope you're right - I've bought my shares back with £5/ share left over.0 -
Looks like the takeover isnt even happening and all this whoha was over nothing.Faith, hope, charity, these three; but the greatest of these is charity.0
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