how unbundling works
the decision to unbundle may be called for by the board of directors or by company managers the board of directors may call for it if the company s stock is performing poorly the company needs to raise capital and or the company wants to distribute cash to shareholders unbundling might help the company to become a pure play for analysts to evaluate this means focusing on a core offering and can be compared easily to comparables in the industry for benchmarking this might improve analyst coverage and stock price management might call for unbundling if it thinks the result would help the company perform better when the board or managers call for unbundling it often improves the company s stock price unbundling might also occur when one company purchases another for its most valuable divisions but determines it has little use for other aspects of the business in some cases unbundling doesn t mean a company has sold off its bundled product line division or subsidiary it could mean it has split operations into different businesses while still maintaining control of each business when this type of unbundling occurs the newly formed companies usually have a great opportunity for success in the future a great example of product unbundling is the trend in the mobile phone space where cellphones and cellphone plans are no longer packaged together benefits of unbundlingproduct unbundling may be beneficial for a company looking to expand options for its consumers for example a company may offer package deals on products at a discounted rate but finds not every consumer benefits from the package the company will decide to unbundle these products to give its customer base a larger selection of items that meets the needs of the consumer 