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发帖数: 481 | 1 Nine Great American Companies That Will Never Recover
By Douglas A. McIntyre | 24/7 Wall St – Wed, Aug 8, 2012
Many American companies have been lauded for their rapid rise to greatness,
a process that sometimes takes less than a decade. These firms become
leaders in their industries, are renowned for innovation, phenomenal growth,
and, in the case of public corporations, their soaring share prices. Google
Inc. (NASDAQ: GOOG) usually makes the list, as does Apple Inc. (NASDAQ:
AAPL). At the other end of the scale are well-known firms that are so
crippled they go bankrupt or disappear entirely. Recently, these have
included AMR, the parent of American Airlines, Borders, and Eastman Kodak.
Somewhere in the middle — between the companies that do phenomenally well
and those that fail — are ones that were once leaders in their industries
but have fallen hopelessly behind. They may remain in business for years or
even decades after their best days. Their executives struggle to find better
strategies, and often their boards seek new management. But, in the case of
companies that fall permanently into trouble and well behind the leaders in
their industries, the chance of a turnaround has passed. Competitors have
taken too much market share, and often have stronger balance sheets. Or,
their products and services are no longer in demand because of changes in
the overall economy or the sectors in which they operate.
To compile a list of names that were once leaders in their industries, but
are no longer and likely will never be again, 24/7 Wall St. looked at
companies that have lost most of their market share, suffered sharp share
price erosion, and posted a sharp drop in earnings, or even losses. We
focused on companies that are included in the S&P 500. Almost all have lost
money recently. Each has had a drop in share price of over 50% in the last
five years. Each has powerful competitors who have built market share or
moats around their businesses that are nearly impossible to overcome.
1. J.C. Penney Company Inc. (NYSE: JCP)
J.C. Penney, founded in 1913, counted itself among the primary retailers and
catalog companies in the US for decades. But under CEO Myron Ullman III,
who took over in 2004, its revenue began to slide, dropping from $19.9
billion in 2007 to $17.3 billion in 2011. Earnings fell from $1.1 billion to
a loss of $152 million in the same period. J.C. Penney’s share price has
fallen 70% in five years. By way of contrast, the shares of Macy’s Inc. (
NYSE: M) and Target Corp. (NYSE: TGT) — two direct competitors — have been
essentially flat over the same period. J.C. Penney was challenged by these
two companies and several others, including Wal-Mart Stores Inc. (NYSE: WMT)
and Costco Wholesale Corp. (NASDAQ: COST). Problems became so severe that J
.C. Penney closed its formerly successful catalog business and reached
outside for a new CEO. The board’s choice was Apple Retail Chief Ron
Johnson, who was picked in June 2011. Johnson changed the company’s pricing
structure, but the reaction was so poor that revenue dropped an
extraordinary 20.1% to $3.2 billion in the first fiscal quarter. J.C. Penney
posted a loss of $163 million. Internet sales, so essential in a world in
which Amazon.com Inc. (NASDAQ: AMZN) has become a significant presence, fell
27.9% to $271 million. By contrast, Macy’s total sales, combining online
and those made in stores, rose 4.3% to $6.1 billion in the last reported
quarter. And Macy’s is hardly J.C. Penney’s largest competitor by revenue
or workforce. Walmart’s sales were $450 billion last year, while Costco’s
were $89 billion.
2. The New York Times Co. (NYSE: NYT)
The New York Times is, and has been for decades, the premier daily newspaper
company in the US. But the company has been shrinking rapidly. Ten years
ago, The New York Times Company made $300 million on revenue of $3.1 billion
. Last year it lost $40 million on revenue of $2.3 billion. The New York
Times did not move online fast enough to offset the rapid erosion of print
advertising. Its tardiness allowed it to be challenged on the Internet by
properties like The Huffington Post, Google News, and the news, sports, and
financial properties of portals such as MSN, AOL, and Yahoo!. As an
indication of how the stock market measures the value of The New York Times
Company, its market cap is $1.2 billion against its revenue of $2.3 billion
in 2011. Low-brow content aggregator Demand Media has a market
capitalization of $865 million against 2011 revenue of $325 million. Demand
lost $13 million last year. The reason the market values of the two
companies are so close? The Times still relies on the dying print business
for the lion’s share of its revenue. Its market cap and cash balance are
too low to allow it to more aggressively move to the internet or buy large
online properties. In the last quarter, The Times’ revenue was roughly flat
at $515 million. The company lost 57 cents a share compared with a profit
of 5 cents a share in the same period last year. The worst news from the
quarter was that “Digital advertising revenues at the News Media Group
decreased 1.6 percent to $52.6 million from $53.5 million mainly due to
declines in national display and real estate classified advertising revenues
.” The Times did make advances in online paid subscriptions, but
circulation revenue barely offset the drop in advertising sales. At the
heart of The New York Times’ uniqueness among American newspapers is the
quality of its editorial content. The company has held the line on retaining
its large editorial staff. It did lay off 100 people in 2009, which was
about 8% of the news staff. The industry is in the midst of another wave of
job cuts. The Times has not been able to show significant top-line growth,
even with its digital subscription efforts. Print is in too much of a
shambles for the company to shore itself up in the digital world.
[More from 24/7 Wall St.: The Most Dangerous Cars in America]
3. Groupon Inc. (NASDAQ: GRPN)
Groupon is an unlikely candidate for a list of companies that have their
best years behind them. One reason Groupon belongs on this list is its stock
price has fallen by well over 70% since its November 2011 IPO. Groupon’s
primary problem is that the online coupon business, in which it was the
major pioneer, is a commodity business now. It has not been terribly
difficult for Amazon and other large retailers like Walmart to enter the
sector. Groupon was the most significant player in its industry after
beginning operations in 2009, when it posted revenue of only $15 million.
That number rose to over $1.6 billion last year, but Groupon paid dearly for
that growth. The company lost $675 million over that same two-year period
before interest and taxes. Groupon’s revenue grew 89% to $559 million in
the most recently reported quarter. But expansion continued to come at a
cost. Groupon’s bottom line grew from a loss of $12 million in the same
quarter last year to one of $147 million. Groupon’s new competitors
replicated most of its tactics very quickly. LivingSocial, the rival most
like Groupon in terms of its business model, had 7.2 million unique visitors
last year to Groupon’s 11 million, according to online industry research
firm Comscore. LivingSocial has financial support from Amazon. Google has
entered the sector with a product called Google Offers. Well-regarded
industry website VentureBeat lists 33 direct competitors to Groupon, and
none is a large corporation. The Chicago Sun-Times, one of the two daily
papers in the city where Groupon is headquartered, summed up Groupon’s
difficult challenges: “Groupon has been weighed down by high marketing and
staffing costs and faces increasing competition from the likes of Amazon.com
and Living Social, among hundreds of other local deals sites.” Even the
hometown press has nothing positive to say about the company.
4. Sprint Nextel Corp. (NYSE: S)
Sprint finally posted some reasonably good results recently. However, these
could not mask the fact that the No. 3 wireless carrier is too small to ever
gain any ground on AT&T Inc. (NYSE: T) and Verizon Wireless (VZ). Sprint’s
revenue rose rapidly from 2002 to 2006. Over the period, sales moved from $
15.2 billion to $41 billion, aided by the buyout of Nextel at the end of
2004. Sprint paid $35 billion for Nextel, and the decision turned out to be
a disaster. The Sprint network ran on a different platform from Nextel’s.
Customers left the combined company. Sprint made the MSN “Customer Service
Hall of Shame” several times, most recently in 2010. Sprint’s customer
service ratings have improved significantly since then, but the damage has
been done. While AT&T and Verizon Wireless have grown rapidly, Sprint’s
revenue has fallen from $41.1 billion in 2007 to $33.7 billion last year.
Sprint’s cumulative loss during that period was over $43 billion. Sprint
now has about 50 million subscribers to Verizon’s 104 million and AT&T’s
95 million. As a Morningstar researcher recently noted, “While Sprint has
struggled, Verizon Wireless and AT&T have benefited at its expense. Fending
off these much larger rivals will be increasingly difficult as data services
become more important to the industry.”
5. Barnes & Noble Inc. (NYSE: BKS)
The cause of Barnes & Noble’s downfall can be described in a word: Amazon.
In 2002, Barnes & Noble made $109 million on sales of $4.9 billion. That
same year, Amazon lost $149 million on revenue of $3.9 billion. Fast forward
to 2011 when Amazon’s revenue reached $48.1 billion and it earned $631
million. Barnes & Noble lost $69 million on $7.1 billion last year. Amazon
may sell consumer electronics equipment and internet streaming video
products, but at its heart it is still the world’s largest bookstore. The
highlight of Amazon’s recent quarter, in which revenue rose 29% to $12.8
billion, was that “Kindle Fire remains the No. 1 bestselling product across
the millions of items available on Amazon.com since launch.” The product
most visibly promoted on the Amazon.com home page? The Kindle. Barnes &
Noble’s legacy business is huge and expensive. As of its April proxy filing
, the company operated 1,338 bookstores in 50 states, including 647
bookstores on college campuses. Obviously those stores require inventory,
rent and personnel. And Barnes & Noble mentions “the maturity of the market
for traditional retail stores” as one of the risk factors in its SEC
filings. Is it any wonder that in its last fiscal year, Barnes & Noble had
retail sales of $4.86 billion? That part of the company’s business shrank
by 2%. Its Nook segment, which encompasses the digital business (including
readers, digital content and accessories), had revenue of only $933 million.
Digital sales rose 34% over the previous year but remain a very modest
portion of sales. Barnes & Noble’s digital division is vulnerable. That is
particularly clear when the market share of its Nook e-reader is taken into
account. The Nook’s share of the US market is 27%, in contrast to a 60%
share for Amazon’s Kindle and 10% for Apple, according to Reuters. Barnes &
Noble is hopelessly outgunned online, and the retail book business has
leveled off.
6. Zynga Inc. (NASDAQ: ZNGA)
Zynga, the premier social network game company, is another name that by all
rights should not be on our list. Zynga’s revenue rose from $19.4 million
in 2008 to $1.14 billion last year. Zynga spent plenty of money to reach the
top position in its industry, and last year lost $404 million. Investors
were drawn to the company because it had been effectively piggy-backing free
and premium games onto the Facebook platform, which currently has nearly
one billion members. The success of the model appeared to be astonishing. In
its last reported quarter, Zynga says it had 192 million monthly unique
users, up 27% from the same quarter a year before. But, as the total number
of virtual games has grown, the cost to maintain a lead has become almost
prohibitive. Zynga lost $23 million last quarter on revenue of $332 million.
In the same quarter a year ago, Zynga made $1 million on revenue of $279
million. Zynga’s growth rate is no longer impressive, and the problems it
faces, apparently, will soon worsen. The company recently lowered its
outlook to reflect delays in launching new games, a faster decline in
existing Web games due in part to a more challenging environment on the
Facebook web platform, and reduced expectations for Draw Something. This bad
news pushed Zynga’s shares to $3, down from a post-IPO high of $15.91.
Zynga’s problems are more complex — and more permanent — than delayed
games or lower returns on its Facebook presence. The game market is becoming
more fragmented by the day as games migrate from consoles to PCs to tablets
and smartphones. Social media is not the only place that game players
gather in great numbers. Many of the most downloaded apps at the Apple App
store are games. The same is true of the Google app store. Zynga’s
insurmountable challenge was summed up by its CEO Mark Pincus on the company
’s recent earnings call. He said, “We think social gaming is just starting
to grow quickly on mobile and we think it has the potential to be the most
important part of the experience on mobile and an even bigger business in
the future.” Despite his vision of the future, Zynga’s shares are in the
rubble. The reason, GameIndustry International reports, is that “Apple iOS
and latterly Android have become the dominant platforms for growth in social
gaming (not necessarily for social gaming itself, but all the growth is on
mobile, not on the web)…” Zynga has been overwhelmed by hordes of new
challengers.
[More from 24/7 Wall St.: America’s Nine Most Damaged Brands]
7. Dell Inc. (NASDAQ: DELL)
Dell is being hammered by the smartphone and tablet PC sectors. This is not
long after its prospects were damaged by poor management decisions and the
rise of Asian manufacturers, which has taken significant market share from
the company. Dell was one of the companies that capitalized on the creation
of the IBM PC platform. Among the others were Hewlett-Packard Co. (NYSE: HPQ
), Compaq, and Gateway. International Business Machines Corp. (NYSE: IBM)
exited the business when it sold its PC operations to China-based Lenovo in
late 2004. After that, the PC industry went through two sets of
transformations. One was consolidation: HP bought Compaq and Acer bought
Gateway. The other was the emergence of large Asian PC businesses — Acer,
Asus and Lenovo. All of these companies, Asian and American, face a
substantial challenge today. PCs are viewed as commodities, which has put
pressure on prices. Computing has moved quickly to smartphones and tablets.
Dell made another substantial mistake. As its share of the global PC market
has fallen, it has not aggressively followed the successful model adopted by
IBM. IBM built a $100 billion business offering consulting, software, IT
support, hardware and financing. It does not rely heavily on a single
offering. Dell’s reliance on PC sales has continued to sting, particularly
now that the PC era has given way to one dominated by smartphones.
8. Advanced Micro Devices Inc. (NYSE: AMD)
AMD’s latest quarterly report shows just how bad off the company is. Year-
over-year revenue fell 10% to $1.4 billion. Non-GAAP net income fell from $
70 million to $46 million. AMD was Intel Corp.’s (NASDAQ: INTC) most direct
competitor five years ago, and held about 24% of the server and PC chip
market in 2007. Last year, its market share fell to 19%. But that is not AMD
’s single greatest problem. The company bought graphic chip maker ATI in
2006 for $5.4 billion. PC makers had begun to add more of these chips to
their machines. AMD needed to keep pace with rival Intel and graphic chip
maker Nvidia Corp. (NASDAQ: NVDA) The main result of the ATI transaction was
that it saddled AMD with an unsustainable debt and did almost nothing to
help AMD’s fortunes. AMD had revenue of $6 billion in 2007, while Intel’s
was $38.3 billion. Last year, AMD’s revenue rose to only $6.6 billion,
while Intel’s soared to $54 billion during the same period. AMD has had
three CEOs in the last five years, as it struggled to find a strategy for
growth. The company’s greatest challenge may lie ahead as much of the
personal computing market moves to tablets and smartphones. The chip used in
the Apple iPad was designed by Apple and made by Samsung. The Apple iPhone
5 will probably be powered by a quad core processor made by Samsung, the
same chip used in the Samsung Galaxy S III. The other primary designers of
the current generation of chips are Qualcomm Inc. (NASDAQ: QCOM) and ARM
Holdings PLC (NASDAQ: ARMH). AMD’s products are almost nowhere to be found
in this latest generation of portable devices.
9. Bank of America Corp. (NYSE: BAC)
Most of the operations that constitute Bank of America today were created
through a series of mergers and buyouts, including the acquisition of
FleetBoston in 2003 and credit card giant MBNA in 2005. These and other
deals were engineered by Ken Lewis, who became CEO in 2001. By 2007, he had
succeeded in making Bank of America the largest bank in the US by deposits.
But Lewis became overzealous as he tried to make the bank even larger. As
the financial system was heading toward near-collapse, Bank of America
bought crippled mortgage bank Countrywide Financial in January 2008 and
deeply troubled investment bank Merrill Lynch in September of that year.
Bank of America’s financial troubles multiplied so rapidly that it was
forced to take much more TARP money than most other large US banks — $45
billion. Lewis’s risk-taking eventually was part of the reason the federal
government pressed the bank to add outside directors who had been regulators
or heads of successful banks. In June 2009, four new directors were
appointed, including a former member of the Board of Governors of the
Federal Reserve System and a former chairman of the Federal Deposit
Insurance Corporation. Lewis was out by the end of the year, and Brian
Moynihan replaced him. But Moynihan’s tenure has been even more disastrous
than Lewis’s. JPMorgan Chase & Co. (NYSE: JPM) passed B of A in assets to
become the largest bank in the US. Crippling losses caused B of A to
announce it would cut more than 30,000 jobs. In late 2011, a $50 billion
class action suit was filed against B of A based on the lack of disclosures
made when it bought Merrill Lynch. Bank of America has also been the target
of several mortgage fraud suits, and entered into a settlement which cost it
and four other large US banks a combined $25 billion. B of A still faces
legal and balance sheet problems, which may force it to raise tens of
billions of dollars. This will undermine the share price. The final and
most difficult challenge is its exposure to the US real estate market, which
is unparalleled among its peers. This, in addition to the unhealed scars
from poor management and the global financial collapse, have left Bank of
America limping along. | T*R
发帖数: 36302 | 2 除了AMD，其他公司都是倒不倒老百姓无所谓的公司。 | g***l
发帖数: 2753 | 3 AMD是怎么也倒不了的了，intel会在他要死掉的时间拉他一把的。
要不intel的垄断地位就变成现实了，准备被拆分吧。
这几个公司里面有几个烙印当CEO的？
【在 T*R 的大作中提到】
: 除了AMD，其他公司都是倒不倒老百姓无所谓的公司。
| D**S
发帖数: 24887 | 4 none maybe?
【在 g***l 的大作中提到】
: AMD是怎么也倒不了的了，intel会在他要死掉的时间拉他一把的。
: 要不intel的垄断地位就变成现实了，准备被拆分吧。
: 这几个公司里面有几个烙印当CEO的？
| T*R
发帖数: 36302 | 5 GROUPON赶快倒吧。
JCPENNY的窗帘还不错。
BARNES/NOBLE留着吧。
DELL从来没买过他家的东西，就是一装配厂，可有可无。
BOA肯定是倒不了的。 | n*****t
发帖数: 22014 | 6 除了 AMD，其他公司基本都多少受到 Internet 冲击
换句话说，所有这些公司几乎都是倒在 IT 上
【在 T*R 的大作中提到】
: 除了AMD，其他公司都是倒不倒老百姓无所谓的公司。
| m*****u
发帖数: 15526 | | j*******n
发帖数: 3254 | | y*h
发帖数: 25423 | 9
'cause it is already dead.
【在 m*****u 的大作中提到】
: 没有算柯达？
| x****u
发帖数: 12955 | 10
AMD也渐渐无所谓了。ARM再过几年就可以取代AMD在低端市场的地位。
【在 T*R 的大作中提到】
: 除了AMD，其他公司都是倒不倒老百姓无所谓的公司。
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