scott opened this issue on Dec 14, 1999 ยท 27 posts
Nance posted Wed, 15 December 1999 at 2:08 AM
Well, that was my first reaction, however, upon some wild speculation... This sounds like: Press Release - "Part One". It seems very likely to me that they have already made a deal with a buyer for the product line. Ok, trying to consider their options tactically, 1) Why would a company make such announcement prior to obtaining the best deal they could get for the product line? It would kill current sales revenue as well as severely undermining the strength of their negotiating position in any subsequent sale of the line. 2) If they did already make a deal, and they announced the divestiture simultaneously with the restructuring for single product focus, it could give the appearance that the move was a defensive reaction to current or anticipated financial difficulties. This makes stockholders nervous and prices go down. 3) By announcing the new single product focus first, it helps project the image that this is a shrewd proactive maneuver by management to maximize the potential of a unique market advantage. Further, by announcing financial projections first, then, subsequently, announcing the deal for the sale of the product line which meets or exceeds these projections, it gives the impression that management is firmly in control of the situation. This makes shareholders confident, less likely to sell, and stock prices go upward. Sound reasonable so far? Ok, why then would they sack 100 people who were presumably the heart & soul of the product development and support teams? hmmmmmm - back to the drawing board. "With all this crap, there's gotta be a pony under here somewhere" -Eternal Optimist Nance