Word: spins
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Dates: during 1990-1999
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American business has been dreaming big dreams for the past several years. Acquisitors from Disney to Chemical Bank continue to gobble up firm after firm. So far this year, there have been more than $270 billion worth of such expansions. Yet the corporate divorce rate runs high, as companies spin off partners they once bought with great fanfare. In fact, Wall Street investors are scouting bargains among once acquisitive companies that are now dubbed "tangerines" because they seem ripe to be taken apart in segments. Meanwhile, the celebrated corporate restructurings of the past decade may be most remembered...
...plenty of room for deals along the lines of both the Time Warner merger and the AT&T breakup. (Businessman Donald Perkins and former U.S. Trade Representative Carla Hills sit on both boards, which voted for conflicting goals.) D'Aveni discerns an intrinsic cycle: poorly conceived mergers turning into spin-offs. The aim is to dominate a market, as Microsoft rules software, Delta dominates the Atlanta airport and Chrysler is the king of minivans. A likely lesson: if sprawl and diversity get in the way of market dominance, break up the company. A likely corollary: if all that stands between...
Actually, the breakup is not all that revolutionary. While mergers have got the headlines lately, the downsizing trend has been at least as important (and AT&T has been a leader; it has eliminated 140,000 jobs since 1984). Nor are split-ups and spin-offs a minor part of that move: one study counts nearly 100 sizable new companies formed by such breakups since 1992. Many, however, were deconglomerations of unrelated businesses, such as ITT's recent three-way division, rather than split-ups of tightly knit operations like...
...Their spin doctors and campaign managers will, of course, transmute personality into a kind of transcendence of politics. But that is an oxymoron. In democratic politics there is no such thing as political transcendence. That is the stuff of the romantic political extremism of Europe. Fascism, communism, Nazism offered politics as a passage to some higher reality. In democracies, and in particular in American democracy, life is more pedestrian. You offer your program, you make your case, you pass your legislation. The notion of rising above politics is either cynicism or sentimentality...
...reason, of course, was spin. The Republicans are planning deep cuts from projected Medicare spending as part of the effort to balance the budget. And the amount they're hoping to squeeze out of Medicare--$270 billion over seven years--is embarrassingly close to the amount--$245 billion--they're planning in tax cuts, mainly for the affluent. Naturally, they would prefer to portray their Medicare cuts as an effort to "save Medicare." But $270 billion is double what would be needed just to stabilize the trust fund...