First they buy, and then they sell
A number of companies over the past few months have announced plans to break up the wide-ranging oligopolies they have acquired so painstakingly over the years. This happens especially in companies that cannot keep up the appearance of growth, in either gross or net revenue. These companies face grumbling stockholders that want a return on their investment.
But this does not signal an end to the push towards oligopoly. For most of these companies, the idea is to define a market segment more narrowly, and to spin off divisions that are dominant and can grow in one specific area. What were once seen as synergies are now seen as irrelevant linkages that sap the ability of upper management to manage profitability. Or maybe it's just the end of the line for an aging CEO's ego trip.
In a way, we can look as this as an accordion effect, where a sequence of high-profile acquisitions keeps the investor community at bay, and where a sell-off or spin-off of those assets also keeps the investors dazzled. Of course, for upper management and their closes advisors, all this activity provides even more big paydays, however it leaves the small investor.
On other thought is that many of these companies now resemble equity firms in their strategies. We could say that buying and selling enterprises are the whole point, not selling products or services.
Here are few examples of notable deacquistions in process:
Viacom
As we've written here, Viacom announced this year that it would divide its painstakingly acquired media empire, splitting off CBS, UPN, Simon & Schuster, Infinity Broadcasting, on one hand, and its cable stations (MTV, Nickelodeon) and its Paramount movie studios. Major stockholder and founder Sumner Redstone will have a big stake in both companies.
Sara Lee
Sara Lee that specializes in so many and varied consumer items has started selling them off after a long period of poor results. It will sell its retail coffee operations, its cosmetics line, its apparel business (Hanes, Playtex, etc.). It will concentrate on delicatessen, bakery, and catering.
RWE
The German utility RWE announced it would sell off its UK and US water utility services companies. It bought these businesses recently, ThamesWater in 2000 and American Water in 2003. Now the company says that it will concentrate on its European electrical and gas utility businesses, which are far more profitable.
IAC
We've tracked the rapid evolution of this Internet-oriented retailer and service provider, as it snapped up one online business after another, including Expedia, hotels.com, and Home Shopping Network. Now CEO Barry Diller has announced that he will spin off all the travel-related businesses into one company, while organizing Home Shopping Network, Ticketmaster, and other non-travel businesses into another company.
Cendant
Like IAC, Cendant has been an overheated acquisition machine, with a string of both online and real-world travel and real estate properties, ranging from Avis to Orbitz and from Century 21 to Ramada. The company now plans to split into four new companies: a hospitality business that manages its hotel assets, a Travel Network company with its booking assets, a real-estate division with two major national agencies, and a car rental division with Avis and Budget. The company has had stagnant stock valuation even after a series of aggressive acquisitions. Cendant had already dropped a number of other, smaller lines of business, from tax preparation to mortgage lending.
6:18:45 PM 
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