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J. Robert Beyster, retired founder of Science Applications International Corp. (SAIC), formerly of San Diego, opposes the company's plan to split into two entities. SAIC wants to split the company into two groups: 1. Research, science, and technology for health, engineering and national security sectors, and 2. Services business such as systems engineering, technical assistance, and financial analysis. On a blog post, reprinted in the Washington Post, Beyster says the stock market seems to like the proposal. However, he says, "the great strength of SAIC is in its size, and in the diversity of talent and the synergy between all the various groups and sectors. Splitting the company will reduce SAIC's ability to draw from its deep bench of talent and experience."

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Visduh Sept. 11, 2012 @ 8:24 a.m.

He's probably right. What Wall Street likes in the short run has no correlation to long run success or failure. And Wall Street loves to see mergers and acquisitions, just as it does spin offs and separations. At the time those things occur the reason given is that they enhance the value of the enterprises. Say what? Putting them together enhances value and breaking them up also enhances value? That's the Wall Street line for sure.

Some time back, in the run up to the tech crash, HP spun off its instrumentation and test equipment business--which was how HP got its start--because it was not growing fast, was "fundamentally different" from computers and peripherals, and was just too stodgy. Since then, HP has struggled and now its long-term prospects are cloudy. Meanwhile Agilent (the newly created company) chugs along and is doing fairly well. HP could use that steady source of profitable revenue as it goes through its boom-and-bust computer and printer cycles. But it is gone and won't be coming back into HP.


Don Bauder Sept. 11, 2012 @ 9:32 a.m.

Precisely. One of our worst cancers is that we have become a nation of financial engineers, rather than a nation of engineers. Wall Street jumps at anything that produces revenues for it (mergers, acquisitions, initial public offerings, spinoffs, leveraged buyouts, etc.) and doesn't care in the slightest whether the activity harms the economy. Wall Street is run by one thing: short term greed. There is no long term thinking on Wall Street. This mentality has eaten into corporations: to please Wall Street, they have to live for the next quarter, not for the long term. Best, Don Bauder


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