Welcome back. On behalf of myself and the staff at Accounting Today, we hope you've enjoyed both a healthy and a happy holiday season.Last year, myriad changes in the profession kept our editorial team hopping with new regulations, top-level executive changes and the traditional flurry of merger and acquisition activity.

No doubt, 2008 promises to be just as active.

Many years ago, I attended a marketing lecture given by long-time Madison Avenue and ad agency guru Al Reis. Among the topics and trends he covered were the inherent dangers of line or brand extension. His theory was anchored in the belief that when you're the category leader in one area, an extension into something else can often dilute or do irreparable harm to your core undertaking.

I'm sure many of us can recall any number of such product marketing missteps, but McDonald's brief, ill-advised foray into pizza remains my personal favorite.

I had more or less placed that lesson in the back of my mind until the recent shake-up at tax prep giant H&R Block resurrected it. The company had, over the past several months, become the target of activist shareholders, most notably former Securities and Exchange Commission Chairman Richard Breeden, who argued that the company should be focusing on tax preparation, and not on its interests in online banking and subprime mortgages.

Considering the sea of red ink, Breeden's strategy was hard to disagree with. In the 15 months that ended July 31, H&R Block lost an eye-opening $736.2 million, largely as a result of losses from its Option One Mortgage Corp. subprime lending unit. Breeden (who, for those interested, holds the Accounting Today record for not returning my phone calls over the years, with a total of nine) cited the mammoth losses incurred by Option One and subsequently waged a proxy battle in an attempt to place a trio of dissident shareholders on Block's board.

Prior to the current debacle that is the subprime mortgage and credit markets, H&R Block in April agreed to divest the unit for roughly $1 billion to private equity firm Cerberus Capital Management. As you can imagine, that agreement collapsed as the U.S. housing market basically imploded. Since then, Block has been trying to salvage a sale of at least part of the unit by modifying the terms of the original agreement, but just as we were going to press the companies announced that they had terminated the deal.

And not coincidentally, the company's chair and chief executive, Mark Ernst, resigned, replaced as chair by Breeden and as interim CEO by former Aetna chief financial officer Alan Bennett.

The question remains whether Breeden will orchestrate a break-up of the company by splitting its tax and online banking divisions, or by exiting the latter completely. That's probably an issue for the company's shareholders to decide. But refocusing its attention to the services that got them where they are in the first place wouldn't be such a bad strategy.

I'm pretty sure I know what Al Reis would have said.

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