Do companies always need to make a profit?

I know this seems like an outrageous question, and your gut reaction is more than likely: “Yes!” A friend of mine who works at a publicly traded technology company mentioned this the other day and it got me thinking. His comment was compounded by the fact that FedEx is cutting its Superbowl advertising this year (instead of staying the course and gobbling up more long-term market share) to shore up its balance sheet.

Is it so unlikely to consider that now is the time to forgo short-term gains in lieu of long-term benefits and profits? In theory it sounds ideal. But it will never happen, and here’s who to blame. Me and you.

As casual investors (as most of us are) in these publicly traded entities, we’re not interested in the long-term gains being made out there. We want a return on our investment – now! And if we don’t get it, we bail. And what happens then? The share price falls.

So I guess I’ll have to accept the fact that if I want to see big companies to forgo short-term profit, I’ll have to take a good look in the mirror, and adjust my personal expectations as well.


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