The Truth Behind Mergers

[marmar]

The Truth Behind Mergers

Sunday, 17 August 2014 00:00
By Joey Gomez, Truthout | News Analysis


Last year Microsoft announced its buyout of Nokia, the Finnish communications and information technology multinational corporation. Now as Microsoft absorbs Nokia, the new CEO of Microsoft has announced the largest layoff - 18,000 employees - in the company's history. After the announcement of the layoffs, the company's stock increased to a point that it hasn't seen since the dot-com boom. Although Microsoft is no stranger to the idea of consuming its competitor, it does beg the question: How will this affect the economy?

Mergers and acquisitions are promoted as having a good economic impact for the general public and consumers. Following the announcement of the layoffs, Microsoft's new CEO has been adamant that the recent absorption of Nokia will allow the company to focus on consumer needs to better benefit them through their products. With the acquisition of Nokia's 30,000-employee workforce, 12,500 will be laid-off. At the same time Microsoft is laying off 5,500 of its own employees.

Historically, it seems most mergers and acquisitions are either achieving a takeover of a company's technology, assets, customers and patents, or purposely invading other competing markets - as was the case with Oracle's takeover of Peoplesoft or the current attempt by Comcast to acquire Time-Warner.

Currently we are seeing the biggest boom in mergers and acquisitions since the recovery, with no sign of slowing. Many would say this is good news as mergers usually occur when the economy is doing better. Yet, the irony is that most, if not all, mergers have led to mass layoffs, while the stock for investors and packages for corporate managers increase. ................(more)

The complete piece is at: http://truth-out.org/news/item/25631-the-truth-behind-mergers

[xchrom]

1. du rec.

[bluesbassman]

2. The "many would say this is good news" are the 1% or are on their payroll.

I'm pretty sure the 18,000 being laid off by Microsoft don't see the current merger boom as good news.

Here's the ugly truth in a merger: Yes, there is some duplication of positions that are reasonably justified in trimming, but the majority of the workload is redistubted across the remaining workforce so that already stretched thin employees see their day to day duties increased. The only "winners" in these "mega mergers" are the 1% who profit from the sale and the increased profits from reduced payroll. That these mergers are clothed in "it's good for consumers" is one of the biggest cons of our generation.

[L0oniX]

3. This is how stock holders or that way of making money is killing our jobs.

[zentrum]

4. Not good news at all.

How can monopolies be good for the 99%? It's the end of price competition.

Office Max is merging with Office Depot. Every smaller mom and pop stationer in the city is closing. The two events go together.

The minimum wage workers at both stores will find themselves either unemployed, or with less hours.

Big businesses would not merge if merger didn't increase their profits. Why is this even a debatable question?

Mergers are bad for the general population and bad for capitalism because they create monopolistic capitalism---which over time always devours everything.

[dickthegrouch]

5. And no-one is asking where the displaced workers go for employment

Is it really better for the economy if 18000 people go on unemployment?

What about the 18000 themselves? Where do they find 18000 jobs in their local economy that paid as much as their previous positions? They all had mortgages or rents, family obligations, schools, car loans, credit card balances etc etc that are now not going to be paid as easily. They all have to downsize too.

The fucking bosses are stealing far more than jobs.

[True Earthling]

6. Nokia was on the path to bankruptcy...

getting killed by Apple and Samsung...

Nokia's future as an independent company is hanging in the balance and Microsoft could be forced to rescue the business if chief executive Stephen Elop cannot resuscitate the group's smartphone business by the end of the year, analysts have warned. The Finnish mobile phone manufacturer announced 10,000 job cuts on Thursday and issued its second profits warning in nine weeks.

Nokia's shares dropped 18%, falling below the €2 mark for the first time since 1996, as it acted to stem massive losses by cutting a fifth of its handset workforce. A total of 40,000 jobs have gone at the company and its Nokia Siemens Networks joint venture since Elop joined in September 2010.

"Stephen Elop is running out of time," said Francisco Jeronimo at telecoms research firm IDC. "If Nokia doesn't grow by the end of this year they will be in a very dangerous position. Many people are saying Microsoft will acquire Nokia."

http://www.theguardian.com/technology/2012/jun/14/nokia-survival-question-10000-jobs-cut

[winter is coming]

7. I mis-read your OP title as "The Truth Behind Muggers". Seems appropriate, somehow. n/t

[HeiressofBickworth]

8. Before retirement, I was a corporate paralegal

and worked on quite a few mergers/acquisitions (M/As) in my time. What the author says in this piece is absolutely true. M/As are not done to improve products, appease consumer demands or anything other than a way to line the pockets of the seller's investors and increase the returns to the purchaser. Large amounts of money are spent to merge or acquire a business. The purchaser who paid out all that money wants a return on that investment -- and soon. There are two ways to increase the bottom line so they can put the money back in their own pockets -- increase the price of the product and reduce labor costs. So essentially, you could say that in addition to the other negative outcomes, M/A's are a contributing factor to inflation.

Having worked on M/A's, I knew the drill. So when the company I worked for was going to be bought by a mega-corporation, I checked the calendar, checked my finances and figured it was time for me to retire. I didn't want to assist them in the demise of the company. Despite the assurances before the merger that there would be no lay-offs and business would be pretty much as usual, within a year the lay-offs started. Now, five years later, they are all gone, the company changed its name and has disappeared into the bowels of the mega-corporation. It's a real shame, too. It was a nice company, good management, generous salaries and benefits and periodic parties and bonuses. They were respected in the field and had satisfied clients and employees. And now they're gone.

Microsoft is doing what has been done many times before and with the same results. There are the handful who prosper and the mass who are looking for jobs that don't exist. Some, usually over 50, will never have anything other than a part-time, minimum-wage service job ever again in their lives. Another win for capitalism, right?