Business: How Not to Grow

Five years ago, San Francisco's Yuba Consolidated Industries was a sturdy little company which by concentrating on its traditional business—gold mining—managed to turn a tidy $1,700,000 profit on sales of $22 million. By last year Yuba had mushroomed into a glamorously diversified corporation that could point to sales of $98 million drawn from enterprises ranging from missile-base construction to the manufacture of power tools. But, in dramatic contrast to W.R. Grace & Co. (see above), Yuba is a case study in how not to expand a corporation. Last week, having lost $12 million last year despite its skyrocketing sales, Yuba was...