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The Perils and Truths of Corporate Turnarounds
NYU Stern finance professor and valuation authority Aswath Damodaran argues that businesses follow a natural lifecycle, and their market valuations must align with their current stage—from early-stage startups to mature, declining enterprises.
Speaking at the Nordic Business Forum, Damodaran highlighted how often corporate value is destroyed when firms attempt to defy their age. He cautioned against mature companies trying to artificially regain their youth, a cycle fueled by an industry of consultants and investment bankers offering the strategic equivalent of cosmetic surgery. When older firms fall for the promise of quick rejuvenation, the results are frequently destructive.
Sustaining a Comeback Through Strategic Transformation
While superficial fixes rarely succeed, fundamentally altering the underlying business model can yield a lasting recovery.
* The Decline: At its zenith, BlackBerry dominated the mobile market with its iconic hardware and secure messaging infrastructure. However, the rapid ascent of Apple’s iPhone and Google's Android platform dismantled its market dominance, forcing the company to halt internal smartphone production by 2016.
* The Pivot: Instead of chasing its past consumer legacy, the company pivoted entirely toward enterprise software, centering its operations on cybersecurity tools for enterprise and government clients alongside its QNX operating system for connected vehicles.
* The Financial Impact: This pivot eventually paid off. By achieving positive quarterly cash flow for the first time in several years, the company demonstrated sustainable momentum. While its current valuation of approximately $5 billion remains far below its former $83 billion peak, it represents a remarkable recovery for a brand once viewed as a casualty of technological disruption.
Source: A section of article is taken from The Indian express online article.
https://indianexpress.com/article/explained/explained-economics/nokia-ericsson-ibm-blackberry-comeback-10865506/lite/