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ComputerWorld: Are companies banking too much on stock prices?

Jan 03, 2000, 20:11 (4 Talkback[s])
(Other stories by David Moschella)

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"Ever since companies like Amazon.com, Yahoo and, more recently, Red Hat enjoyed their multibillion-dollar IPOs, their most important strategic challenge has been to conjure up a business model that could possibly justify their sky-high valuations. Not surprisingly, all three have decided that hypergrowth is really the only acceptable path forward."

"For example, since there was clearly no way that Amazon could justify its stock price as a mere seller of books, it actually has had little choice but to try to turn itself into an online Wal-Mart. Similarly, would Yahoo shareholders really have tolerated a CEO who was content to build just a premium search engine? More recently, Red Hat's purchase of Cygnus Solutions and its consulting services is evidence of a similar pressure to grow at all costs...."

"You can already see signs of similar risks for today's giants. Many people I know are tired of messy portals and are relieved to experience the pure search capability of a site like Google.com. Similarly, because they now must behave like titans of industry, key members of the Linux community are already losing some of their special luster. I've even started to check out Barnesandnoble.com as a quiet protest of Amazon's cluttered path."

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