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Technology Stocks : Loral Space & Communications

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To: JGoren who wrote (5562)	3/23/1999 7:01:00 PM
From: Drew Williams	Read Replies (1) of 10852

My point was that there is not a lot of synergy between General Motors' core business (cars/transportation) and Hughes (satellites/telecommunications), and that this lack of synergy is bad for General Motors and may be bad for Hughes in the long run. To me, their relationship smacks of the mostly discredited business theories that created behemoth conglomerates back in the fifties and sixties. Part of the idea, as others have mentioned here, was that the diversification outside your core business smoothed out the cash flow, because they would be on independent business cycles. Since then, most of these conglomerates have been dismantled, shedding business not related to their core business in order to be more competitive. Bigger, we've seen, is not necessarily better. Focus is more important than size. When you've only got one business, it is amazing what you can do, because you have no choice. Succeed or go out of business. It is surprising how many very smart people keep forgetting that excellence in one business is no guarantee of base competency in another.

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