CEO admits biggest mistake in corporate history!

A cross posting from the Business Studies blog. In 2001, internet service provider AOL completed a $164bn (£104bn) takeover of US media giant Time Warner. There were lots of crazy takeovers going on during the dot.com boom (and bust) during that period, but the AOL/Time-Warner deal is often cited as a spectacularly bad one.  And now there is an admission that the strategic decision taken by AOL was perhaps the worst in business history.

This article in the Telegraph contains some useful background and describes the admission by Jeff Bewkes, the chairman and chief executive of Time Warner.

The article makes reference to “strengths” (link to SWOT) and to the need for a business to focus on activities where it can genuinely add value.

The New York Times has this excellent retrospective article almost 10 years on about why the merger failed

Unit 3 Micro: The Dawn of a Shareholder Spring? [8 May 2012]
Unit 3 Micro: Revision on Takeovers and Mergers [3 Apr 2012]
A2 Micro: Competition Policy [20 May 2011]
A2 Micro: Business Growth [18 May 2011]
Shared Value and the Limitations of CSR [12 Feb 2011]
Apple and Goldman Sachs - Worlds Apart [19 Jan 2011]
Student View: Takeovers and Mergers and Shareholder Value [27 Sep 2010]
External Growth - Google’s Acquisition Boom [21 Sep 2010]
Market implications of creating the world’s biggest airline [19 Sep 2010]
Potash - a battle for grey dust that has become gold dust [26 Aug 2010]
Profit seeking paradoxes in an oblique world [15 May 2010]
Warner on merger motivations and shareholder value [24 Jan 2010]
Business Growth - Costa Looks East [18 Dec 2009]
Managing a global business in turbulent times [23 Sep 2009]
Oracle-Sun merger [3 Sep 2009]
Mobile Takeovers - Who will gain if five becomes four? [29 Jun 2009]
Owners v Managers and the Principle Agent Problem [24 May 2009]
Pepsi and Vertical Integration [21 Apr 2009]
Airline mergers and competition policy [29 Oct 2008]
General Motors - Braking to Avoid Oblivion [13 Oct 2008]
Black Horse becomes White Knight [17 Sep 2008]
Rentokil falls into profits trap [24 Aug 2008]
Somerfield walks down the aisle with the Co-Op [17 Jul 2008]
Revision: Growth of Businesses [30 Mar 2008]
DAB - Dead and Buried? [12 Feb 2008]

ECONOMICS TEACHER RESOURCE NEWSLETTER

Join over 6,000 other Economics Teachers in the UK and around the world who receive the tutor2u regular Economics Resource Email Newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops + loads of great ideas for teaching economics from our blog authors.