Politics, Weather, Photography, and the Dog
Monday 12 May 2014

Snopes just republished the legend of the E.T. game cartridges in light of the actual burial site being dug up recently. Forgetting for a moment the legend itself, the background story was a description of how Warner management killed Atari:

In 1982, Warner Communications could honestly claim to own a goose that laid golden eggs. Its money-producing fowl was called Atari, a video game company it purchased for $28 million in 1976 which had since burgeoned into a $2 billion concern. In the early 1980s Atari owned 80% of the video game market, it accounted for 70% of Warner's operating profits, and in the fourth quarter of 1982 the Wall Street "whisper number" concerning Atari's expected Atari symbol earnings predicted a 50% increase over the previous year.

The goose died at 3:04 P.M. EST on 7 December 1982, when Atari reported only a 10% to 15% increase in expected earnings, not the 50% figure so many people had been counting on. By the end of the following day Warner stock had plummeted to two-thirds of its previous value, and Warner closed out the quarter with its profits down a mind-boggling 56%. (Even worse, a minor scandal erupted when it was revealed that Atari's president and CEO had sold 5,000 shares of Warner stock a mere 23 minutes before announcing Atari's disappointing sales figures.) Atari racked up over half a billion dollars ($536 million) in losses in 1983, and by the end of 1984 Warner had sold the company.

What accounted for the sudden death of Warner's prized goose? A number of interrelated factors brought about its fatal illness...

The factors Snopes summarized highlight how acquisitions by incompatible companies can go wrong, among other things.

Monday 12 May 2014 17:30:01 CDT (UTC-05:00)  |  | Business#
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David Braverman is a software developer in Chicago, and the creator of Weather Now. Parker is the most adorable dog on the planet, 80% of the time.
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