Stratrix
Business Model

The Cross-Subsidy

Which part of the business quietly funds the rest?

73%
of the 11 settled decisions on record held
8 held0 reversed3 held in part1 too early to call

Held over settled: 11 records whose verdict is in, from forks between 1967–2026, with 1 still too early to call and counted in neither. This is what happened to the companies on record, not the odds for your decision. The corpus covers decisions documented well enough to verify, which skews toward companies that lasted long enough to be written about.

Samsung, Amazon, Berkshire Hathaway, GE, Alphabet (Google), CVS Health, Sony, United Airlines and 2 more faced this decision. Below is what was on the table, what each chose, and what it returned.

The record

  1. 2022

    Samsung

    Held in part

    Whether to cut memory output in the downturn or keep building counter-cyclically

    • Hold capex, keep building — Refuse output cuts and invest through the trough to absorb sharechose this
    • Cut capex like rivals — Reduce production and investment as prices collapse

    Stated reasonThe theory that a strong player who keeps building through a downturn absorbs abandoned share and emerges larger

    What happened
    • 2023 chip division operating result: chip division lost roughly KRW 14.87 trillion; group profit KRW 6.57 trillion
    • 2023 cash return on DRAM: plunged to roughly 3% in 2023, from more than 30% before the pandemic
    • 2025 DRAM revenue share leadership: SK Hynix overtook Samsung in DRAM revenue share, 36% to 34%, ending Samsung's lead since 1992
    Read the full analysis →
  2. 2003

    Amazon

    Held

    Whether to build a data-center competency into a sellable cloud service, funding patience for thin retail

    • Build cloud as a service — Externalize data-center competency as a sellable AWS offeringchose this
    • Keep infrastructure internal — Use the data-center skill only to run Amazon's own operations

    Stated reasonAWS was a deliberately built competency whose high margins let Amazon run retail thin on purpose for years

    What happened
    • 2024 AWS operating income: $39.8 billion of operating income on $107.6 billion of revenue
    • 2024 AWS operating margin: 37.04% in 2024
    • 2024 North America retail operating income: $25.0 billion of operating income at a 6.44% margin
    Read the full analysis →
  3. 2026

    Samsung

    Held

    Whether Samsung's memory division should nearly double the internal DRAM transfer price it charges its own phone-and-appliance division during the upcycle

    • Raise internal DRAM price — Charge DX near-market prices, booking margin inside DSchose this
    • Hold internal price steady — Shield DX margins by keeping the transfer price low

    Stated reasonThe transfer price shifts margin from the low-multiple consumer business to the high-multiple commodity business, optimizing the part of Samsung the market rewards most

    What happened
    • 2026 DS share of group operating profit: DS accounted for 93.8% of total operating profit
    • 2026 DX division operating profit: DX division operating profit fell 38% YoY
    • 2026 Group operating profit: Operating profit of KRW 57.23 trillion, a 756% jump, a record
    Read the full analysis →
  4. 1967

    Berkshire Hathaway

    Held

    Whether to buy an insurer to use its float as investable capital rather than treat it as a regulatory necessity

    • Buy insurer, invest float — Acquire National Indemnity and treat its float as investable capital.chose this
    • Park float in bonds — Treat float as a regulatory necessity held in safe bonds.

    Stated reasonThe gap between collecting premiums and paying claims was a borrowing facility the world had failed to value, providing cheap leverage to fund investing

    Committed$8.6 million (Price paid for National Indemnity Company and National Fire & Marine.)

    What happened
    • 2024-12-31 Insurance float: about $171 billion at year-end 2024, up from $19.4 million in 1967
    • 2024 Underwriting gain: $9.02 billion underwriting gain across all insurance operations in 2024, after ~$1.2 billion in Helene and Milton claims
    Read the full analysis →
  5. 2008

    GE

    Held in part

    How to fund GE Capital when wholesale markets froze: reach for the government's FDIC debt guarantee or find another path

    • Use FDIC guarantee program — Lobby to qualify and issue notes backed by the U.S. governmentchose this
    • Take TARP equity — Accept Treasury equity injection with executive-pay limits

    Stated reasonGE Capital could not roll its short-term funding when wholesale markets froze, so it sought the FDIC guarantee — and avoided the pay limits TARP banks accepted

    What happened
    • 2013-07-08 Regulatory status: FSOC designated GECC a nonbank SIFI
    • 2016-06-29 Business dismantling and SIFI status: FSOC rescinded the designation after GE exited most lending and cut assets by over 80%
    Read the full analysis →
  6. 2015

    Alphabet (Google)

    Held

    Whether to restructure Google into Alphabet, walling off the ad cash engine from the moonshot cash burn

    • Restructure into Alphabet — Wall off Google Services from Other Bets so the subsidy is visiblechose this
    • Keep blended structure — Report Search and moonshots inside one number, spending stays invisible

    Stated reasonTo give more management scale for unrelated businesses and to let shareholders see cash leaking from the ad business into long-shot ventures

    What happened
    • 2021 Other Bets cumulative operating losses: operating losses of about $24.3 billion since the Alphabet renaming through approximately mid-2021
    • 2024 Google Services operating income vs Other Bets loss: Google Services operating income was $121.3 billion; Other Bets lost about $4.4 billion
    Read the full analysis →
  7. 2018

    CVS Health

    Held in part

    Should CVS acquire Aetna to become a vertically integrated diversified health company?

    • Acquire Aetna insurer — Buy an insurer to build a vertically integrated health giant.chose this
    • Stay a pharmacy-plus-PBM — Remain a drugstore chain with its Caremark PBM.

    Stated reasonTo become a vertically integrated health company combining insurance, pharmacy, and care delivery under one roof.

    What happened
    • 2024 Health Care Benefits adjusted operating income: collapsed to $307 million, down from $5,577 million the prior year
    • 2024 Total operating income: fell 38% to $8.5 billion, dragged by the insurance arm
    Read the full analysis →
  8. 2019

    Sony

    Held

    Should Sony spin off its image-sensor unit or keep it integrated?

    • Spin off sensor unit — List I&SS as a separately traded company
    • Keep integrated — Retain the sensor unit under full group controlchose this

    Stated reasonA standalone sensor company loses the integration with cameras, gaming, sensing, and long-horizon R&D that makes the position valuable to Sony.

    What happened
    • 2024 smartphone sensor market share: more than half the global smartphone image-sensor market, the top position
    • 2025 group sales and operating income: record full-year sales of ¥12,479.6 billion and operating income of ¥1,447.5 billion, with I&SS among record-profit drivers
    Read the full analysis →
  9. 2020

    United Airlines

    Held

    Whether to raise cash by financing against MileagePlus by moving it into a separate subsidiary

    • Collateralize MileagePlus for debt — Move loyalty program to a subsidiary and borrow against it.chose this
    • Raise cash conventionally — Use a previously announced committed term loan facility instead.

    Stated reasonMileagePlus generates predictable, durable revenue that lenders would accept as collateral, unlike the airline operations

    What happened
    • 2024 loyalty revenue growth: In the fourth quarter of 2024, loyalty revenue grew 12% year-over-year
    • 2025-07 MileagePlus-secured debt repayment: United repaid its MileagePlus-secured debt in full by July 2025, ahead of rivals
    Read the full analysis →
  10. 2024

    Comcast

    Held

    Should Comcast spin off its declining cable networks while keeping the broadband engine funding its streaming bet?

    • Spin off cable networks — Cut loose legacy cable channels and keep NBC, Peacock, studios, parks.chose this
    • Keep the full empire — Retain all cable networks under one roof and continue cross-subsidy.

    Stated reasonAmputate the cable channels most exposed to cord-cutting so broadband cash could concentrate on the streaming bet Comcast still believed in.

    What happened
    • 2026-01-05 spin-off completion: Comcast completed the separation of Versant Media Group, which commenced trading on Nasdaq
    • 2026 Peacock subscribers and loss: reached 46 million paying subscribers while posting a $432 million quarterly loss
    Read the full analysis →
  11. 1997

    PepsiCo

    Held

    Keep the restaurant chains or spin them off to refocus on snacks and beverages

    • Keep restaurant chains — Retain Pizza Hut, Taco Bell, and KFC as vertical integration
    • Spin off chains — Divest the three chains, keeping only a beverage supply contractchose this

    Stated reasonThe restaurant businesses were not producing the return on assets seen in beverages and snacks and diluted returns

    What happened
    • 2024 Frito-Lay North America share of division operating profit: 43% of total division operating profit in 2024, versus 15% for PepsiCo Beverages North America
    Read the full analysis →
  12. 2025

    PepsiCo

    Too early to call

    Whether to discount Frito-Lay's high-margin snacks to defend volume

    • Cut SKUs and lower snack prices — Discount Lay's, Doritos, Tostitos and Cheetos to defend volumechose this
    • Hold pricing power on snacks — Preserve the high-margin engine's pricing intact

    Stated reasonTo defend volume on the very products whose pricing power was the engine of the subsidy

    Read the full analysis →