Closing the GE-derived founding business (2003)

When a company built on borrowed technology loses the lender

This company was born as an agent selling another firm’s equipment. Its role was to connect GE’s network with Dentsu’s customers, and the “International Information Services” in the corporate name amounts to a description of that role. The end of the founding business was therefore not merely the disposal of an unprofitable line. Unless it changed into a company that made what it sold, no reason for its existence would remain. The loss in the year to March 2003 can be seen as a figure produced in the middle of that reassembly.

The same thing happened on the capital side. Why the joint-venture partner left is not recorded in the disclosures, but for GE this company was the Japanese sales window for its own network, and once that network was folded the grounds for continuing to hold it disappeared as well. The Dentsu that remained raised its ratio past 60% and did not move it for the next twenty years. A company begun on borrowed technology loses its lender and settles inside a single parent — the 66-to-34 joint-venture ratio of 1975 has now been replaced by a different tug-of-war at 61.8 to 38.2.