UK: BAE'S TRAIL OF DESTRUCTION.

UK: BAE'S TRAIL OF DESTRUCTION. - BAe had an uncomfortable ride in the 1980s. For most of that decade its cash flow return on investment (CFROI) was at or below its cost of capital, while assets employed soared. Although its failure to meet its cost of c

by
Last Updated: 31 Aug 2010

BAe had an uncomfortable ride in the 1980s. For most of that decade its cash flow return on investment (CFROI) was at or below its cost of capital, while assets employed soared. Although its failure to meet its cost of capital made BAe a value destroyer, it was busily investing more and more capital in growth, often through acquisitions such as Rover, Royal Ordnance and the ill-timed Arlington Properties bid in 1989. When BAe later reversed its investment strategy in 1993 by selling off its corporate jet business, construction arm Ballast Nedam and, in 1994, Rover, its share performance bounced back.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Social responsibility may no longer be a choice

Editorial: Having securitised businesses’ loans and paid their wage bills, it’s not inconceivable the government...

What went wrong at Wirecard

And how to stop it happening to you.

Leadership lessons from Jürgen Klopp

The Liverpool manager exemplifies ‘the long win’, based not on results but on clarity of...

How to get a grip on stress

Once a zebra escapes the lion's jaws, it goes back to grazing peacefully. There's a...

A leadership thought: Treat your colleagues like customers

One minute briefing: Create a platform where others can see their success, says AVEVA CEO...

The ignominious death of Gordon Gekko

Profit at all costs is a defunct philosophy, and purpose a corporate superpower, argues this...