Here’s why I think that; its not because they can’t, but because to do so is not in their or their shareholders best interest.
Increasingly, businesses don’t generate profits. They generate capital gains.
Here’s the US opportunity… if your company makes profits, it will have to pay taxes on them. (nominally, in theory, 35%) Then you and your investors will have to pay taxes on them again when they’re distributed to as dividends.… Read more
Netflix shares continue to rise despite management stating costs will rise as will borrowing. All this to create more content
So let’s think this through… how will Netflix make a profit
1. Not gonna happen, shareholders benefit from increasing valuation- smoke & mirrors like Amazon
2. Let’s get more subscribers- sure but there is a finite number of people to watch.… Read more
Not my view, but that of commentator James Montier.
And I can see exactly where he is coming from. And thinking through his views, what superficially seems like a good idea- reward CEOs for increasing share price- has taken a damaging and illogical turn.
In short, SVM (Shareholder Value management) theory states that the only relevant detail corporations have to focus on is delivering increased financial returns to shareholders.… Read more