It is amazing to think how the world has changed in the past 20 years and how new industries came forth when no existed before. An interesting history of such changes was written by Caroline Van Hasselt book High Wire Act – Ted Rogers and the Empire that Debt Built by John Wiley & Sons, Toronto, 2007. In the book, the author talks about cable which is the reason for the existence of the Rogers company but in the end they made the switch to where their greatest revenues come from – wireless or cell phones. The process of making the transition and the growth of the cell phone industry makes a fascinating read in relationship to the types of decisions companies have to make to ensure their survival and growth

Companies which specialized in the infrastructure are a very capital intensive business and to continually have the best technology that the rest of the world accepts is a very tough decision. If the companies get it right, they make millions, get it wrong and your business plans need a major adjustment For capital intensive companies – they live in a world which expects to have pricing of services in a monopoly like conditions For non capital intensive companies competing on price is a given. For Rogers as cell phones became smaller, the prices fell and the average person needed one, Rogers revenues zoomed up, the debt fell and soon they could and now pay a dividend. At the moment the industry is driven by the data to sell to your devices.

Linking to dividend paying stocks, when a company pays a dividend its management can not and is not expected to bet the company on new technologies – that is for growth companies. Management must change from an very entrepreneurial one that hates the competition to using its assets to the best of its abilities to achieve a monopoly like competition for the bulk of its revenues. Most companies are not successful in the transition, the type of management required is different, which makes the process interesting.

There are more questions than answers, till the next time – to raising questions