[BabyPeanut]

The most fundemental problem with mergers and aquisitions is that eventually there's no one left to be your customers since no company would hire itself.

[Jack]

Actually, they do all the time. Business units can easily buy from (and sell to) each other. Each subsidiary is treated as a profit center.

[dmtu]

The problem is IMVHO that mergers generally are money losers for the shareholders and a boon to the bankers and CEOs who fund and found them. Perhaps I'm mistaken, and if I am I'm sure someone will let me know but I can't remember any large mergers in the past that was good for a shareholder.

[Jack]

You mention shareholders. Keep in mind that large pension funds, mutual funds, and other institutions own large blocks of stock; and, in some cases at least, could vote out a slate of directors that didn't accomplish satisfactory growth.

I think the incipient buyout of AT&T by SBC is of interest. Notice that they hope to shed 13,000 jobs over the next several years. So much of this is driven by the desire to cut costs, which might arguably benefit shareholders through improved earnings.

That being said, acquisitions can be driven by CEO ego and corporate incompetence. AT&T is, again, a case in point. They wanted to get into the computer business, so they bought Olivetti and NCR...and later a cable company. In each case, it was a disaster. But I think this was due to incompetence in the executive suite - particularly on the part of CEO Robert Allen - than being inherent to M&A (Merger and Acquisition) activity.

[BabyPeanut]

Do you actually use any AT&T products? They lost their phone monopoly, they blew their hand at UNIX and the last time I saw them they were trying to be some sort of credit card company.