fkusumot on 24 February 2008
| Bodhesatva said: I'll admit, my knowledge of financial markets is provincial, at best. Can someone with more savvy answer me this: is it normal for a company that has seen consistently eroding profits to be spending lavishly on takeovers? Is that a usual solutuion to that kind of problem? |
Yeah. The idea is to expand or die. With the acquisition/merger the idea is to create synergies that will lead to reduction of overhead and better profit margins. Markets tend to become monopolies without government intervention for this reason (and others).
