From: Phil Osborn (philosborn2001@yahoo.com)
Date: Sun Jun 15 2003 - 16:27:07 MDT
I bought a bunch of Commodore stock in the mid'80's at
about $8/share. In late '92, I believe it was, some
prominent analyst said that Commodore stock was the
hottest buy around, and the stock shot up to
$20/share, and, I think, maybe to $30 at peak. From
there, a few months later, it had fallen to $3/share
and then the company went bankrupt.
I had plenty of insider knowledge as a journalist
covering Amiga products and related issues for several
Amiga magazines. It was clear that the Amiga was
miles ahead of the competition in virtually every
respect, and about 10 million Amigas were ultimately
sold, so it certainly wasn't a market size problem,
and Amiga owners tended to be even more fanatically
loyal than Mac adicts. From every technical
perspective, the Amiga was the horse to bet on.
Except, the company was run by people who knew NOTHING
about computers or the computer market, and the CEO (a
banker) at one point expressed puzzlement over why
people would get so excited about a machine. After
Commodore finally collapsed, various people from the
engineering dept. made retrospective comments about
how many times Commodore Mgt. had "snatched defeat
from the jaws of victory."
Commodore is the example that I know most intimately
and best, having spent a sizeable portion of 15 years
covering the Amiga, and 5 years prior as a VIC20/C64
user. However, the same sort of analysis applies to a
host of other tech companies, including Apple, Atari,
AutoDesk, ....
In each case, the bankers basically bought control and
then installed their people to run things - meaning
CEO's whose job it was to be the bankers' agents,
report back to them, and not rock the boat. These
people were controllable in that they could not
possibly have achieved such a position on their
merits; i.e., it was their very incompetence and
consequent controllability (where else would they get
a job?) that were their desireable characteristics.
Terrified of making a mistake, but also terrified of
losing control, these flunkies predictably slotted
other incompetent jerks into positions to spy for them
and support their decisions, and those people did
likewise, leaving only engineering relatively
unscathed (only relatively, however, as when Commodore
put the same character who was responsible years
earlier for the C64 power supply that ALWAYS died in
charge of new products for the Amiga line, and he -
predictably - came up with the Amiga 600, which every
single reviewer noted immediately (and correctly)
would be a total failure, filling no concievable
market niche.
Bottom line: whenever a market area - personal
computers, internet companies, biotech? - attracts the
attention of the banking/investment community, it is
the kiss of death. They will finagle control away
from the dangerous innovators who made the company
profitable and then milk it all the way down, trading
their insider knowledge to their buddies to keep
making money even as the core value is diluted to
zero. That's why I've been sticking mainly with
smaller companies still run by the original
management.
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