It may not be "broke", but a lot of the time with these ancient systems ongoing maintenance costs more than replacement would - but quarterly accounting ensures anyone who did the smart thing would be punished for it.
> quarterly accounting ensures anyone who did the smart thing would be punished for it
It occurs to me--is there some sort of financial instrument a company could buy (or sell) which would incentivize them to take a longer-term view of their own performance?
The one thing that comes to mind is Enron's scheme of selling debt backed by the integral of future projected profits from an energy contract, and then writing that debt-asset down as current-quarter earnings. It did overvalue their stock, but it also locked them into a model where contracts with declining long-term outlooks would force a loss, rather than just a declining gain.
That doesn't seem like a glowing recommendation, I admit--but an overvalue of the stock in this case could actually be the "economically correct" value; it could just be incorporating the company's potential upside for being forced to take a longer-term view, and rewarding the participants for taking on increased downside risk.
The stock price, in an efficient market (that is, one that understands what it's investing in, unlike what happened with Enron) would also be offset with lower demand due to said increased risk--but a company could still come out slightly better off for establishing these instruments. It just comes down to whether other short-term investors actually value a company that "goes long" more than a regular quarter-to-quarter-earnings one.
>It occurs to me--is there some sort of financial instrument a company could buy (or sell) which would incentivize them to take a longer-term view of their own performance?
ESOP. When the stockholders are the employees, quarterly earnings take a back seat to making sure the company will still be successful 30 years from now when they retire.
>is there some sort of financial instrument a company could buy (or sell) which would incentivize them to take a longer-term view of their own performance?
That sort of platform migration should be handled using some sort of capex methodology. We are in the midst of four ERP migrations (at four facilities) and their funding is expensed out over 10 years to keep from taking a big initial hit to the books.
When I was in high school in the late 70s, my school canceled their support contract for their PDP-8e, and supposedly that year's support contract money was sufficient to buy a handful of Apple IIs.
