The Great Buyout Spree
In the past year Atlanta companies have been bought-out at an incredibly fast clip. What does this mean for our economic health? Does it matter to lose a headquarter if you gain that ready cash? Sure, there’s a status change from HQ to division but I wonder if on balance we come out ahead?
Last November, Cisco bought Scientific Atlanta for $6.9 billion, followed quickly by the acquisition of Georgia Pacific by the private company Koch. In the last few months IBM bought ISS and California-based McKesson bought Per-Se for $1.3 and $1.8 billion respectively. All told, over $30 billion in wealth from California, New York and Kansas to shareholders that one would assume are largely locals. Some is going to growing the next generation where ISS’s Chris Klaus’s Advanced Computing center opened at Georgia Tech last month. How much of this money will be used to fund the next startup or expand a new company? As for the remaining divisions, we already know IBM is pouring money into expanding ISS and Cisco is using SA to push IPTV, are the others benefiting as well?
If this is good news, there’s more to come: $80 billion for BellSouth and $8 billion for Delta. If it’s bad news, what would happen if those go and the oft-rumored sale of SunTrust? What do you think? Are we really good at growing attractive companies or are we struggling?
I guess as long as the talented people stick around town while we gain a tremendous amount of wealth that has to be a recipe for long-term success.
November 21st, 2006 at 4:17 pm
Look at today’s Financial Times, and find the article “Atlanta woos young, talented and restless.” Atlanta is attracting young talent. “Between 1990 and 2000 ….. Atlanta increased its number of university educated 25 to 34 year olds by 46 per cent, while its share of the nationwide group rose faster than any other city’s”
So I would say that this is extremely good news. No?
November 21st, 2006 at 6:23 pm
Actually, I’m afraid it’s rather naiive of you to believe that personal wealth increasing for a small minority at the expense of jobs and stability for the majority in some way benefits the community at large. As an example, US Airways, based in Phoenix, is slated to merge with Delta and the headquarters of this conglomerate will remain west. As such, more jobs will remain in Phoenix, and less in New Orleans and other parts southward. Some southern shareholders will undoubtedly do well as a result, but in the end, their personal holdings will never be shared with the masses.
“I guess as long as the talented people stick around town while we gain a tremendous amount of wealth that has to be a recipe for long-term success..”
Oh really? Success for whom? Are you a shareholder? This sounds like people who brag about their rich uncles, vicariously revelling in the success of others simply due to proximity.
Oh, and Harry van Beuningen…if you only start with 1 or 2 percent of your population being made up of college educated 25-34 year olds, a 46% increase is paltry, I’m afraid…lol…
The bottom line is that, like it or not, your area is not a particularly attractive place to live and these companies know it. They provide short-term incentives for professionals to break down and actually move there, but the story is always the same: “…don’t worry, honey!…ah…you’ll, you’ll learn to love Atlanta!…gangsta-hip-hop is in right now!…you’ll see!…” Fast foreward three months: “Oh, my gosh, can you believe we actually live in Georgia?”… Then the begging for a transfer starts….
w
November 22nd, 2006 at 6:03 pm
I agree with Wilma on the notion that selling usually means losing, for anyone that isn’t a selling shareholder. However, those results will vary from company to company. The bigger and slower (more overhead, lower margin) the sellers are, the harder they fall (and the opposite applies to buyers).
Harry: That stat sounds more like “Atlanta attracted young talent 10 years ago.” It’s a very significant stat, as those 25-34 year-olds made babies, which are now Georgia’s #1 cash crop. A few of them started/folded/grew businesses, further driving the economics around here.
Wilma: Basic agreement aside, you’re really spreading FUD here. You should ask the Water Store for a refund, because they’ve put something in your weekly supply.
November 25th, 2006 at 7:04 pm
Sorry, Some Other Mike, no FUD here in fact… If you take the time to explore the power that simple perception wields, you will admit that a great deal of the reasons behind why Atlanta remains the ignored cousin in a trailer at the bottom of the US is due to poor reputation and perception by the rest of the country. Fairly or unfairly, the truth is that communities who embrace what they are essentially, simple collections of families and good folks going about the business of living, will never draw the irk or ire of more sophisticated metropoli dwellers. Examples of these are Little Rock, Baton Ruge, Huntsville, Alabama… those kinds of places. But when a larger city such as Atlanta or Dallas or Houston begins to insist that it be noticed by citizens of New York, LA, San Francisco, or any other cultural mecca, it reminds one of the small-town kid who pathetically wears the baseball cap at 1/4 turn, sports fake bling around his neck, but forgets to change his farm boots. This naturally makes people want to put these mystifyingly out of touch southerners in their place, so to speak. Another example of this is when Texans proudly tell Californians that they’re “…the third coast!” Instead of the reaction being what the Texan inevitably wants, i.e. “…wow, I’m impressed!”, generally the reaction is something to the effect of “…is that what you say to make yourselves feel better about living in Texas?” I find this to be a unique phenomena to the south, somehow. No one rolls their eyes when someone says they’re from Cape Cod.
w
November 27th, 2006 at 3:36 am
Ok, Wilma…how long have you been living here, and why haven’t you moved back yet?
November 28th, 2006 at 12:45 pm
questions for W:
-Have you been to any Robert Spano-conducted concerts by the ASO? (There’s a reason that when the New Yorker published a long article about conductors, Spano was highlighted.)
-Have you ever been to The Atlanta Contemporary Art Center? MOCAGA? MODA?
-Ever set foot in any of these galleries: Marcia Wood, SandlerHudson, Kiang, Solomon Projects, Saltworks, Jackson Fine Art, or Romo?
-Ever attend a play at Actor’s Express, 7 Stages, PushPush, Horizon, Theatrical Outfit, or Dad’s Garage? (A few of the reasons the national nonprofit theatre organization TCG held its annual meeting here this year. My counterparts - board members in Seattle, Chicago, and, yes, San Francisco - don’t agree with you about Atlanta’s reputation in the national theatre community.)
-Have you seen the Morris Louis show at the High? Or its show of selections from Atlanta photography collections (Elton John is not the only serious photography collector here, as you will see if you check out this show - open till Jan. 7.)
-And what are you doing to make Atlanta a better place?
December 4th, 2006 at 7:34 pm
Mike and BPJ…
Actually, I’m doing nothing to make Atlanta a better place, since I live on the west coast. I’ve had to spend a fair amount of time there over the years, for a variety of reasons, and my comments are largely to provide an outsider’s perspective on your city, mostly directed toward the authors of the articles in this blog. They seem bent on pretending that Atlanta is something that it is not. Not Market Street in SF, Times Square NY, or the Louvre. Civic minded citizens going about the business of improving their community is admirable. As I said before, it’s the promotion of the notion that you’re something that you’re not is what is irritating.
w
December 6th, 2006 at 4:38 pm
You know, if this was ‘old web’, I’d actually buy the notion that you live out west. However, this is ubiquitous web, and I think you live as close to the west coast as the other posters on this site. Cumulatively, your posts indicate you have moved here from Phoenix or Tucson, and are quite unhappy about it. Also, when you’re done “bringing sexy back”, let us know where it went in the first place.
On a topical note, we can add Gold*Kist to the list of ex-Atlanta companies, and Home Depot might be on the block? Wow.
December 6th, 2006 at 8:42 pm
Some Other Mike,
That struck me as humorous for some reason…I really do live on the West Coast, thank God, and spend the majority of my time in Arizona and California. I’m not sure why this would be difficult to believe, ironically, considering that all of this communication is over the web, and I’ve never even suggested that my time in Atlanta has been more than small chunks at a time. Incidentally, I’m curious as to what the Timba-lake reference means…
w
December 7th, 2006 at 5:41 pm
I don’t know anyone who equates Atlanta with Paris, London, New York, or San Francisco. Atlanta is not a great city, in my opinion, although it could be. But it is a much better place than the “there’s-no-culture-here” crowd comprehends.
The city is changing rapidly, and mostly for the better. Here is the key statistic to keep in mind: in 1990, the average per-person income in the city of Atlanta was 10% below that of the rest of the metro area; by 2004, the average per-person income in Atlanta was 28% higher than that of those who live outside the city in the metro region; and that was the biggest “flip” in those numbers anywhere in the US - at a time when city life is becoming more popular nationwide. What those numbers tell us is that people with choices are increasingly choosing to live intown - and that has consequences for everything (transit, education, arts support, parks, safety, etc.)
Oh, and I meant to mention the Carlos Museum in my earlier post. Visit it now……and realize it didn’t exist 25 years ago (well there was a small museum there when I was an Emory undergrad in the 70s, but it mixed stuffed animals and seashells in with a few mummies in a tiny space…..just go see it now!)
December 9th, 2006 at 2:22 pm
BPJ,
Fair Enough….
w