Sometimes it's amazing to watch what the Wall Street deal makers get away with. They have big companies buy up other companies (consolidation) talking up all these wonderful "synergies" and then they break up those very same companies, spinning them out and talking about "unlocking shareholder value." Funny, we thought that the shareholder value was supposed to come from the synergies -- or at least that's what they told us during the consolidation phase. Of course, the bankers make money at both ends of the transaction -- and, often, that's the only real rationale for certain deals. For example, we never quite understood why AT&T broke itself apart (after building itself up through consolidation). Years ago, it had all the makings of a dominant "quadruple play" player, which is something that everyone is so damn excited about these days. Yet, what did they do? They sold their cable division (which had both TV and cable broadband) off to Comcast, spun out the wireless division (something they quickly regretted) into a stand alone company only to watch it swallowed up by Cingular -- and then was left out in the cold as the rest of the telco world zipped right by, allowing SBC to snap up the leftovers on the way out the door. Whatever happened to all that synergy and shareholder value? It seems a lot of it went into the expensive suits you see on Wall Street. So, consider us skeptical that the next round of corporate breakups makes much sense. Of course, the "good news" is that it appears at least some folks agree. The article notes that a number of big spinoff deals aren't looking so hot, and have only made more people realize that it's all about reshuffling the deck chairs on the titanic (which giving some extra cash to Wall Street) for many of these deals.
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