How Could Digital's Collapse Be So Precipitous? It's Because, In Many Ways, Financial Performance Data Is Misleading. As You Move Up To The Top Of The Market, You're Getting Rid Of The Less Profitable Products At The Low End And Adding Business With More Attractive Margins At The High End. The Rate Of Unit Volume Growth Might Be Tapering Off As You Pursue These Smaller Markets, But Your Margins Actually Look Better. So Wall Street Rewards Your Stock Price Until You Hit The Ceiling.

-Clayton Christensen

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How Could Digital's Collapse Be So Precipitous?

Clayton Christensen

How Could Digital's Collapse Be So Precipitous? It's Because, In Many Ways, Financial Performance Data Is Misleading. As You Move Up To The Top Of The Market, You're Getting Rid Of The Less Profitable Products At The Low End And Adding Business With More Attractive Margins At The High End. The Rate Of Unit Volume Growth Might Be Tapering Off As You Pursue These Smaller Markets, But Your Margins Actually Look Better. So Wall Street Rewards Your Stock Price Until You Hit The Ceiling.

Topic

Wall

Moving

Data

To Prop Up The Stock Price, Managers Have To Turn Down The Screws On Everybody. That Forces Them To Cancel All The Projects That Would Lead To Future Growth In Order To Drop Money To The Bottom Line. This Is Hp's Dilemma Today. Once A Company's Growth Has Stopped, The Game As We Have Known It Is Over. It's A Scary Thing.

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Games

Scary