In this century, we could see tech giants such as Apple, Amazon, Microsoft, and Google spinoff key businesses into separate public companies and here’s 3 reasons why:
1) The old guard of the tech world are currently doing that in the face of changing economic and tech landscapes. Xerox, article here, and HP, article here, both legacy tech companies from earlier in the 1900’s, after having grown so big, have now spun off their companies into 2 separate public companies. One focused on hardware like printers, inks, and desktops, etc. And the other on software and tech services.
They hope that by spinning off the big companies, it will create faster more nimble companies that can cope and adapt better to the changing landscapes. HP also recently announced that they will take it one step farther and spinoff the software and tech services company again and merge the tech services portion with CSC, another tech services company that will create a powerhouse for tech services with over $26 Billion in annual revenue. This leaves HP with two separate companies again, one still focused on hardware, and one focused on software. One can expect that Xerox and HP can merge their respective companies to create both a hardware powerhouse and a separate software powerhouse.
2) If Xerox and HP are doing this toward the tail end of their legacy after so many decades, who’s to say we can’t expect the same from Apple, Amazon, and Google after say 70 years or so. By the end of this century, for example, we should see Apple and Google spin off their car departments into separate public companies and perhaps, just a theory, they will either get bought out by the likes of the future GM or Ford or some other car company or merge with them in the future changing economic landscape and some turmoil that will most likely go on.
Why should you care? Basically it boils down to this, if Xerox and HP can go at it this long and if you held their stock for those many decades, you’d have stock in 3-5 different companies right now. Meaning that if you hold stock in the 3 companies of Apple, Amazon, and Google, you’ll most likely end up with 6-9 different company stocks in the next 70 years or so.
3) Apple, Amazon, Microsoft, and Google have overlapping departments that can benefit from spinoffs and mergers.
- They can spin off their phone departments and merge them into one big phone and services provider to rival the likes of Verizon and AT&T.
- Spin off and merge their music and streaming services to rival Spotify and Pandora, Pandora of which, is already a public company.
- Spin off and merge their car departments to create a car powerhouse and perhaps maybe even merge with Tesla to rival GM and Ford.
- Spin off and merge their software departments to create a software powerhouse.
- Spin off and merge their hardwares and create a laptop, desktop, etc. powerhouse.