Playboy Gains Capital & 'Spins' Web Division

Playboy Enterprises, Inc. is a huge, international company with many concerns besides its publishing business. Today, when building capital is everything and losses are sky-high in certain cases, a company like Playboy has no other option than to get rid of its most draining businesses.

In this case, it's the Web division. The larger question, though, rests with the way Playboy is handling the loss. The company is 'spinning' off its Web division in order to build capital for its new E-Division, as well as to eliminate ongoing development costs for the new E-Division from the company's books.

In a time of hot Internet sell-offs, what does the 'spin' really mean? Many companies would prefer to go the route of asking investors to finance ventures like the Web division. With Playboy, however, the value proposition of Playboy Enterprises is at stake, and both the Web division and the parent company will encounter problems in sharing and extending the company brand.

Many companies have successfully made the spin-off work, and in 1999, 29 companies completed a Web spin-off. While some were successful, others suffered drastic losses in the price per share of stock.

You may like these other stories...

Camp Hopes Estate Tax Will Be on Its Way OutAn article in Bloomberg said that Republicans are considering voting this year to repeal the U.S. estate tax, according to House Ways and Means Chairman Dave Camp (R.-Mich.). He...
Read more from Larry Perry here and in the Today's World of Audits archive.Learning "how" to audit cash is mainly learning "when" to audit cash and to "what extent" cash auditing procedures...
Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.