Final answer:
Discontinuing a profitable segment results in a loss of revenue and a decrease in overall profitability for the company. It may be a strategic move but carries potential negative consequences such as layoffs and loss of market share.
Step-by-step explanation:
Discontinuing a profitable segment can result in two significant outcomes. Firstly, the company will see an immediate loss of revenue from the cessation of sales from that segment. Secondly, there will be an effect on the overall profitability of the firm, as the discontinued segment was contributing to the total profits of the business.
While discontinuation might seem counterintuitive for a profitable segment, it can be a strategic move in cases where the segment is not aligned with the company's long-term goals, or where reallocation of resources to more profitable areas is deemed more beneficial. However, such a decision should always be weighed against the potential negative consequences, including the loss of revenue and decreased overall profitability, as well as the possibility of layoffs and the loss of customer confidence or market share.