They were still investing in 8-bit computers because they thought they'd recoup the investment. They did the 128, the 128D, and almost did a laptop and the C-65.
At the time it seemed like a sane thing to do while now we know they probably should have bet the farm on the Amigas (and take that Sun deal for the 3000/UX)
It was pretty clear the leadership were making bad decisions, when they weren't absent.