You’ve hit on a big reason - short term gains. The partners at Accenture, Infosys and the rest circle the execs at old industry companies. The companies start performing worse, though nothing some accounting gimmicks can’t cover. Then they have a very bad quarter, enough that it will ruin their fiscal year. Fingers start pointing, and talk turns to “belt tightening” and “turning fixed costs to variable.” All of a sudden the proposals from Big Consulting that provide savings bankable this fiscal year sound very good.
It doesn’t take long for the cracks to show:
- Not enough program/project management.
- An intuition that service dropped but no good metrics.
- Retrain the outsourcers after the first team quit.
- Inability to size new projects.
- Shadow IT departments form in the business units.
- The outsourcers don’t care about things like vendor consolidation or holding other vendors feet to the fire.
All of this might still be worth it if it’s done strategically to improve a chronically underperforming IT department. It’s rarely effective when rushed to cover up poor performance of the core business.
Which makeshype ability a API that allows the big players to comandeer small companies into suicidal behiveour , resulting in easy take overs via buy outs. So, the question is not: who is all in on the hype cycle, but who is all out.
If you mean that taking out any kind of debt is fundamentally a bet that whatever is being put up as collateral will grow faster than the interest rate? Because if it doesn't the risk that suddenly debt holders control you grows by a lot. Yes, absolutely.
So, applied to GOOG, Alphabet Management is betting they will grow more than 4.5% per year at least until 2030.
There is also some weirdness, like Alphabet making a 500 million USD bet short term USD interest rates will be lower than 4% over the 2025-2028 period.
Sort of. They can use the debt to grow, in which case they’re betting that they will get more profit than the principal plus interest payments. (Beating a 4% return on the loan, not the whole company)
They could also use it to change the capital structure buying back shares. This simultaneously increases risk and share price, unless the reissue more shares.
In both cases, if they can’t pay the interest payments, the company gets handed over to the creditors. Not an issue for Google, but a lot of startups struggle with venture debt.
In the 70s in SF my father had his car window broken by someone who wanted to steal his parking space. He found his car pushed in front of an adjacent driveway, and ticketed.
I wonder if Local LLM spotify playlist suggestions hang together less well than frontier model spotify playlist suggestions. Like… Gavin Bryars yes, Cloud Cult yes, Tuxedomoon yes, Run DMC wait what?, Olivia Sellerio yes….
The question is are we more like farm workers who will be unemployed because of the farm or accountants who become much more valuable and high paid because of the spreadsheet?
And I am grateful for not working on a farm, it’s hard work!
It’s not necessarily the sale. Some private equity companies move from “Let’s invest like we’re shooting for the moon” to “Let’s invest like we want to improve margins and flip this on 3-5 years”
It’s not inherently wrong but it is a different model, and sometimes companies suffer as a result.
Interesting. My observation on IBM is their entire business model is:
1 - Audit your customers
2 - Buy back shares
3 - Force early retirements
It was easy to see why Watson failed in that environment. The revenue was “We’ll let you out of the $6mm audit bill if you buy $2mm of Watson”. Companies would agree, install better asset management, and never put Watson into production.
I couldn’t imagine Quantum Comouting surviving there. Spinning it off the best play.
That's Kyndryl: They spun it off into it's own entity after "IBM Global Services" had such a (deservedly) poor reputation that they were scraping the bottom of the barrel for clients and employees. Not that Kyndryl is any better, but it's enough of a rebrand that you might fool decision makers for the few minutes that it takes to get them to buy in.
they've just spun off the first quantum computer pure-play, the highest of techs, the greenest of green-fields, and your observation is "IBM doesn't do this"
It doesn’t take long for the cracks to show:
- Not enough program/project management.
- An intuition that service dropped but no good metrics.
- Retrain the outsourcers after the first team quit.
- Inability to size new projects.
- Shadow IT departments form in the business units.
- The outsourcers don’t care about things like vendor consolidation or holding other vendors feet to the fire.
All of this might still be worth it if it’s done strategically to improve a chronically underperforming IT department. It’s rarely effective when rushed to cover up poor performance of the core business.
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