It has always frustrated me to see companies act in their long-term worst interests only to satisfy the large investors and Wall Street that pressured them. In this context, it's never enough to earn a hefty stream of revenue, spending less than you're making which results in a profit. Any small (privately held) business or individual (earning a paycheck, paying monthly bills and stocking enough away for a rainy day) would call that a "WIN." Obviously, it's great to continue to earn more each year (growth) but at the same time, if you manage to continue churning out profits year after year... you should be content. Being content is not / was not enough for Wall Street.... and they suffered the same fate they imposed on other businesses as a result.
When publicly held companies are forced to show double-digit percentage growth month over month, they leverage an otherwise healthy business to deliver the results. CEO's are compensated by the publicly traded price... rather than the true health of their business and as a result make poor decisions.
I think there is a case to be made for having *fewer* companies on the open-market. For some high-growth companies it makes sense or those that pay dividends to it's stock-holders but it would seem that the vast majority are there for the wrong reasons ... for the big-pay day on the day of their IPO, vast sums of cash infusion for no need and over-extended growth in a market that really couldn't support it.
Starbucks for example... great product, great marketing but it was the pressure of Wall Street investors that said, "That's not enough. What other food are you going to sell? Why don't you add more stores? Why don't you source the coffee cheaper? Why don't you pay the labor less?" And now what? Starbucks may have eeked out more profit following that mantra but now has to retract and fire it's employees. Was it worth the gamble? I would argue it was not because at the end of the day, where is that extra revenue they earned? It was presumably stuck in the share price which is a mythical figure and has since (along with the rest of the market) imploded. Thank You Wall Street.
It's been widely assumed that capitalisim works and when you have the finaical community encouraging growth, it's in everyone's best interest. The problem comes with unrealistic growth expectations that result in over-leveraging and over-borrowing to meet a short-term goal. Wall Street encouraged it and is now (as we all are) the victim of their own mantra... growth at any cost, even the long-term health of their own firms.
