But managers will focus on the short-run so that they look good, and can perhaps get a raise. For example, in 1999 Hong Kong Telecommunications lost its monopoly over the international long distance telephone services. It had to come up with other ways to make up for the revenue that was lost. They have diversified greatly. On Demand has not had much success in Europe in the past, but it seems to be an up and coming technology.
Property management is an area in which they have no past or prior experiences with.
Diversifying is often risky because of numerous factors, such as lack of knowledge and experience in a certain area. Investors need to be aware that such occurrences and events as the ones previously mentioned, do happen within corporations and may even occur without one's knowledge. The likelihood of the problems occurring are greatest in large corporations where there is a higher degree of the separation of ownership and management, and thus perhaps an occurrence of a conflict of the goals of the managers and the goals of the shareholders. One can attempt to reduce the chance of becoming an owner to a corporation with these problems by carrying out careful research of the company. This doesn't eliminate the fact that such things still might occur in the future, but it is better not to get involved with a company which has had to deal with such problems in the past.