Next Door Neighbors by Pat Sandy for September 17, 2021

She is so thrilled she can’t stand it.

“Do you know what day this is?” For me it’s the 50th anniversary of RCA announcing they were leaving the computer business.

“You might find this kind of interesting. . .” If not, it’s OK if you don’t read further, but it IS kind of interesting. . .

In the 1920s and ’30s Radio Corporation of America was the dominant company in the radio, recording, and broadcasting industries. With time out for WWII, in the ’50s and ’60s they were dominant first in B&W, then color, TV. But economic dominance invites scrutiny from the politicians and bureaucrats, so RCA began to diversify to dilute their position in electronics. By the time I was hired in 1969 RCA included Hertz car rentals, Random House publishing, Banquet frozen foods, and Coronet Industries (rugs).

But CEO Robert Sarnoff (son of the legendary “General” David Sarnoff) had a long-term vision for RCA’s future. He realized that someday computers would shrink in size and cost to become available in the home. And no company was better positioned to sell a family their first computer than the company that sold them their first radio, phonograph, B&W and color TVs. So RCA expanded their originally government-only computer division into the commercial computer market in order to build up a base of corporate computer expertise.

But this put RCA Computers on a collision course with the mighty IBM. I’ll skip those details but it was going to be expensive, so Sarnoff committed to spending (meaning losing) a billion dollars over the next ten years to pursue his long-term goal for home computers. But eventually the presidents of the non-computer divisions got tired of seeing their profits drained into the bottomless pit of the computer division. One Friday they called a board meeting, voted out Sarnoff, decided to kill the computer division, waited until the stock markets closed, then publicly announced their actions.

(Continued below.)

I was at home on September 17, 1971 (50 years ago today) after a good day at work when I got a call from my manager to tell me he had been driving home when he heard the corporate announcement over the radio. The layoffs began almost immediately. Every two weeks (the pay period) more and more of my coworkers disappeared. It was the most depressing part of my life. But then the layoffs abruptly ended and there was a period of silence. Suddenly in December there was an announcement that Sperry Univac was buying the contracts of the RCA computer customers plus a few facilities, contingent on the hiring of 2,500 (out of 10,000) former RCA employees. I like to think Univac paid $57M (plus ongoing revenues) to get me.

Lesson 1: Synergistic diversification may sometimes be desirable but conglomerates are a stupid idea. You cannot effectively run any one of those divisions when you are in constant conflict with every other division. (Conglomerates are a Frankenstein offshoot of the antitrust laws, but that is a separate story.)

Lesson 2: When you want to get rid of a horse, do not shoot it before trying to sell it. I’m convinced that a smarter board of directors could have gotten a lot more that 17 cents on the dollar if they had not announced they were killing the computer business.

Fifty years. My, that’s a long time.

To: pschearer WOW! That was boring.

And also Monte Cristo sandwich day.

Hold my beer and watch this !!

Our 44th wedding anniversary? Yup!

Yippie Ki Yay!

I thought the show was Hee-Haw, late and unlamented