I read with despair an analysis by a leading research house, advising institutional investors, CEO’s and small share holders alike..
However XXXX company continues to highlight its desire to expand into [MARKET] which we view as maintaining an elevated level of risk and we would prefer to return its excess capital to shareholders.
So basically don’t invest in the companies future, don’t build new stuff, don’t get into new markets, don’t grow, instead give back to your shareholders…
This focus on shareholders return is killing our companies. CEOs have gotten the message: The point of running a company was to keep the share price high ..and apparently the analysts happy.
CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.
But its not sustainable. This is the type of thinking that sees the demise of once great companies like Kodak and Sony and the perversion of business practice like share buy backs or worse, corrupt practices
I agree that share holders should be repaid. But not at the expense of the corporation itself.
sadly, … the buybacks are simply a waste of money …. and ultimately come at the cost of growth and innovation.
And that’s the greatest cost of this short sighted version of capitalism that has taken hold. Growth and Innovation. Peter Druckers, was on the right track with his maxim
“the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
And he’s not alone, Inamori from Kyocera is actively resisting this new capitalism… lets hope more do