10 Big Brands in Big Trouble
Last Updated Oct 4, 2011 2:40 PM EDT
Here's a list you're not likely to see anywhere else: 10 once-great, publicly-traded companies in big trouble. What do I mean by big trouble? Each company fits at least one of the following criteria:
Significant risk of bankruptcy or major restructuringSignificant risk of takeover, divestiture, or proxy battleSignificant mismanagement / operating underperformanceChronic executive and director turnover or transitionsWhat's particularly unique about this list is the source. It's not from a survey or research Leather Corporate Gifts report and I'm not a stock market analyst. I am, however, a management consultant who knows business. And I do mean business. All these companies are vulnerable.
Does making the list mean a company is doomed? Of course not. For one thing, I can be wrong. It happens. Also, just about any company can be turned around with the right CEO, the right strategy, and of course, flawless execution. It happens.
10 Big Brands in Big Trouble
1. American Airlines
While United, Delta, and other major carriers have declared bankruptcy and emerged stronger as a result, American has managed to negotiate major union concessions and stay afloat, but not without a mountain of debt and pension obligations. How long can AA continue to operate in the red? With $17.1 billion in debt, it's really only a matter of time. Shareholders are nervous - parent company AMR's share price is down 75% this year.
2. Research In Motion
The pioneer of the once-invincible Blackberry has become the third company in a two-company smartphone race between Apple's iPhone and Google's Android platform. Not only that, but RIM has also botched the all-important tablet phenomenon. How did that happen? Co-CEOs Mike Lazaridis and Jim Balsillie are the likely culprits, but RIM's board is standing behind its co-leaders, although the stock is off 70%, year-to-date.
When I first called Sprint a failing turnaround nearly three years ago, readers took me to task because I didn't give CEO Dan Hesse enough time. Well, the company has reported losses of nearly $9 billion since then, the stock's still sitting near an all-time low, and now, Hesse is "betting the company" by committing to buy over 30 million iPhones over the next four years. What a mess.
The media giant that once all-but owned the internet and bought Time Warner for $160 billion, went public again in 2009 and promptly fell off a cliff. Revenues have since declined sharply, losses are piling up, and the company's market value is down 50% from its IPO to a paltry $1.2 billion. CEO Tim Armstrong's latest strategy du jour is web-based video. How the once-mighty do fall.
Over two years ago, I called Kodak what it was: a mid-sized company organized like a behemoth. I also said I didn't think CEO Antonio Perez had what it takes to turn the company around. Since then, the company has bled over $1 billion of red ink while revenues flat-lined and debt piled up, all of which sparked bankruptcy fears and a precipitous plunge in share price to an all-time low last Friday.
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