The Company in Middle Age (1): Still growing but not as fast. Occasional Midlife crisis

Companies that manage to reach middle age are more stable than young companies.

They have made a name for themselves and they've learned from their mistakes.  They have a good business going, or they wouldn't have gotten this far.  They've got a proven record of reliability.  Chances are they've got money in the bank and they've developed a good relationship with the bankers, which comes in handy if they need to borrow more.

In other words, they have setled into a comfortable routine.  They're still growing, but not as fast as before.  They have to struggle to stay in shape, just as the rest of us do when we reach middle age.  If they allow themselves to relax too much, leaner and meaner competitors will come along to challenge the. 

A company can have a midlife crisis, the same as a person.  Whatever it's been doing doesn't seem to be working anymore.  It abandons the old routines and thrashes around looking for a new identity.  This sort of crisis happens all the time. It happened to Apple.

A company's midlife crisis puts investors in a quandary.  If the stock has already dropped in price, investors have to decide whether

• to sell it and avoid even bigger losses or
• hold on to it and hope that the company can launch a comeback. 

In hindsight, it's easy to see that Apple recovered, but at the time of the crisis, the recovery was far from assured.