Are companies too diversified these days? (1 Viewer)

[Brian Perry]

Yesterday I read with surprise the announcement that Walt Disney was writing off over $100 million because of United Airlines' bankruptcy. One may ask: Why in the world would Disney be affected by UAL? Well, apparently in 1992 they decided to buy 11 airplanes and lease them to various airlines, including United.

I think this illustrates one of the reasons people are sick of the stock market. Aside from corporate corruption, you now have companies involved in businesses they obviously have no expertise in. What would possibly be Disney's reason for "investing" in aircraft leases? Was the extra return on capital worth the extra risk? Evidently not.

Maybe Disney should focus on its core products, which have been pretty mediocre these days (Treasure Planet, anyone?).

 

[Lance Nichols]

Core prduct? Focus?

Did I not read that Disney had gone back to the bad old days, and had hacked it's animation team to pieces again?

Did they not learn the last time? Focus on GOOD stories, make great animation, and the people will come.

*sigh*

That being said, I can see some companies wanting to diversify to some extent. If the core business goes south, due to a market change, or maturity, then they have the time to shift into something new.

THAT being said, if you concentrate on a core product, you should be in tune with its market to the point you can sense things are coming, and shift to a new core then.

Disney owning planes is just strange, unless they are using it as a tax hole/shelter of some sort.