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Larry W. Smith / EPA file
Bankrupt American Airlines is a takeover target.
Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year. This year’s list reflects the brutally competitive nature of certain industries and the reason why companies cannot afford to fall behind in efficiency, innovation or financing.
American Airlines will disappear in 2013 because of its inefficiency. It was the premier carrier in the United States for almost 30 years -- even surviving through periods when most other carriers went bankrupt. However, it lost its critical advantage of scale when Northwest merged with Delta and Continental merged with United. Within two years, American became a medium-sized carrier.
Research In Motion may be the best example of an innovative company that lost its edge. As a result, it will disappear in 2013. Five years ago, RIM was the only smartphone company of any size, and it had almost the entire corporate market. But it made a fatal mistake in failing to adapt its technology for consumer use. In June 2007, Apple launched the iPhone, and the rest is history.
Pacific Sunwear no longer has the capital to compete. The retailer will be gone by the end of 2013. In the company’s most recent 10-Q, it said one of its biggest risks was running low on capital and not meeting financial obligations.
We made many accurate calls last year, but the speed with which some of them came true was surprising. MySpace was sold by News Corp. less than a week after our list was published.
Several other 2011 nominees are also no longer around. Saab filed for bankruptcy only five months after 24/7 published last year’s predictions. The car company has been sold yet again to an investment group called National Electric Vehicle Sweden, probably for little more than car parts.
In Nov. 2011, Ericsson dumped its half of the Sony Ericsson mobile phone business, apparently aware of something that Sony has yet to realize -- the smartphone industry is owned by Apple and Google’s Android-run phones. Similarly, Yum Brands! dumped A&W as sales were miniscule compared to flagship brands KFC and Taco Bell.
A few of the companies we said would vanish are still operating -- barely. American Apparel is now a penny stock. Nokia is another company 24/7 still predicts will go away soon. The former Finnish heavyweight just fired 10,000 employees, or 20 percent of its workforce.
24/7 Wall St.: America's richest school districts
We also made a few bad calls. Sears and Sony Pictures are still operating in essentially the same form they were a year ago. Kellogg’s Corn Pops and Soap Opera Digest are doing just fine.
This year we continue to take a methodical approach in deciding which brands to include on our list of brands that will disappear. The major criteria are:
1) A rapid fall-off in sales and steep losses.
2) Disclosures by the parent of the brand that it might go out of business.
3) Rapidly rising costs that are extremely unlikely to be recouped through higher prices.
4) Companies that are sold.
5) Companies that go into bankruptcy.
6) Companies that have lost the great majority of their customers.
7) Operations with rapidly withering market share.
Each brand on the list suffers from one or more of these problems. Each of the 10 will be gone, based on our definitions, within 18 months.
This is 24/7 Wall St.’s brands that will disappear in 2013.
1. American Airlines
American’s parent AMR filed for Chapter 11 bankruptcy in Nov. 2011. The airline itself still operates largely as it did prior to the filing, but with some of the advantages the bankruptcy of a parent brings. Labor costs will be cut, along with debt service and lease obligations for airplanes. AMR says it plans to emerge from Chapter 11 as a viable airline. But that will not happen. US Airways already has made it clear that it wants to buy American’s assets. As soon as the rumors of a potential buyout started in April, some of American’s largest unions said they backed such a plan as a way to protect jobs. Earlier this month, US Airways CEO Doug Parker announced his desire to merge the two airlines. With US Airways probably willing to give AMR’s creditors a good deal to get American’s assets, the potential deal received tremendous support from bondholders and analysts. US Airways has much to gain from this transaction, as its position in the carrier market has been eroded by the mergers of Northwest and Delta and the later combination of United and Continental.
2. Talbots
Battered retailer The Talbots is supposed to be taken private by Sycamore Partners for just over $2.75 a share, or $190 million. The offer has been delayed for some reason. Sycamore already has lowered its offer once from $3.05 a share it extended to the company in December. Among all the badly damaged retailers hurt by the recession, compounded by its failure to appeal to consumers with distinctive products, Talbots has to be near the top of the list. While its shares traded for almost $26 five years ago, they now change hands for $2.50. It is a wonder that Sycamore wants to buy the retailer. Even if the deal closes, Sycamore may find there is no solution to making the company viable again. When it last announced earnings, Talbots management said it planned to close 110 stores. The company also said it would try to find a new CEO. Talbots made only $1 million last quarter on $275 million in revenue. At the same time it announced earnings, it admitted that it could be in default under its debt facilities if its financial condition deteriorated further. Talbots has been flanked by a number of department stores that carry women’s discount ware and a number of niche chains, including Ann Taylor, Chico’s FAS and Limited Brands. The company’s earnings demonstrate clearly the extent to which customers have abandoned Talbots. Its revenue was $2.3 billion in fiscal 2008, a figure on which it lost money. Annual sales are barely half that now. With the exception of a tiny profit last year, the retailer has lost money every year in the past five.
24/7 Wall St.: 8 states slashing local funding
3. Current TV
Al Gore’s Current TV was on life support even before it fired its only bankable star, Keith Olbermann, in March following a set of battles with the host over his perks. He was replaced by serial talk show host failure Eliot Spitzer. Compared to Olbermann’s March figures, Spitzer’s ratings in April were down nearly 70 percent, according to TV audience measurement firm Nielsen. At the time, The Hollywood Reporter wrote, “Replacement Eliot Spitzer pulled an anemic 47,000 total viewers in the first outing of 'Viewpoint,' with just 10,000 among adults 25-54. The weeks since saw an early rebound, particularly in the demo, but in its four weeks on air Viewpoint has steadily declined in both respects.” Reuters recently reported that Current TV’s audience had fallen enough that cable giant Time Warner Cable may have the right to discontinue carrying the channel. The closest Current TV has to a star is talk show veteran Joy Behar, a former cast member of “The View,” who had her own show canceled by CNN’s HLN in November. Gore does not have the pockets to keep a network with no future going.
4. Research In Motion
RIM once owned the smartphone market. Its BlackBerry products were used largely by businesses. It is hardly worth repeating the story of how RIM was late to the consumer market, where it has been pounded relentlessly by Apple and an army of Google Android phones from manufacturers as diverse as Taiwan's HTC, South Korea’s Samsung and Motorola in the U.S. The pace at which the company fell apart once the process began was even more extraordinary than its rise. Revenue and net income jumped from $6 billion and $1.3 billion, respectively, in fiscal 2008 to $20 billion and $3.4 billion in fiscal 2011. In just the past year, however, the company has warned twice that it would miss its earnings forecast, replaced its long-time CEO, warned a third time about its first-quarter loss, and disclosed plans for layoffs of thousands of employees. The company’s board said it was reviewing “strategic options,” which would include a sale. The best measurement of the swiftness of RIM’s fall is the change of its share of the U.S. smartphone market. Research group NPD recently reported that RIM’s U.S. market share was 44% in 2009 but only 10% last year. Data from research group Comscore shows that share has fallen further this year. The net effect on RIM’s stock price has been devastating, taking it down from $144 four years ago to $11 recently. RIM cannot survive as a standalone operation in the face of these trends. The Wall Street Journal recently reported “outright buyers could include Asian handset makers like HTC Corp or online retailer Amazon.com Inc. which has jumped into the tablet business.”
5. Pacific Sunwear
Pacific Sunwear built its reputation offering “California-style” accessories, primarily sunglasses, shoes and swimwear. The company was started in a surf shop in Newport Beach in 1980. Recently, highly regarded corporate balance sheet and earnings research firm GMI Ratings put Pacific Sunwear of California on its list of companies at risk of going bankrupt. That should come as no surprise. Five years ago, the company’s stock traded for $23. Recently, it dropped to $1.50. In its most recent reported quarter, Pacific Sunwear lost $15 million on revenue of $174 million. The retailer’s cash and cash equivalents dropped to $22 million from $50 million at the end of the previous quarter. Pacific Sunwear management said the company would have a non-GAAP net loss in the current quarter as well. Pacific Sunwear also disclosed it had a new line of credit with Wells Fargo. Its comments about the loan in its latest 10-Q were telling: “if we were to experience same-store sales declines similar to those which occurred in fiscal 2010 and 2009, we may be required to access most, if not all, of the New Credit Facility and potentially require other sources of financing to fund our operations, which might not be available.” Why is the company in so much trouble? It is too small and is in a commoditized business. Nearly every major department store chain sells products similar to those Pacific Sunwear offers, and so do many niche retailers. Pacific Sunwear, meanwhile, has only 729 small stores. What will happen to the retailer? It could be bought by a larger company -- its market cap is only $108 million -- or it may go out of business with its inventory sold to other retailers.
Read the rest of the brands that will disappear in 2013 at the 24/7 Wall St. web site.
Leave a Comment:
Last year I read an article like this that said Sears would be gone.
We'll see.
I wonder why they didn't predict Hostess last year? I think that this is nothing more than a cheap story about some rich guys that are having fun guessing.
*laughs* Mark - You read last year's version of this article - as is actually acknowledged in THIS article, they listed Sears and it is still around. Predictions like these are not a crystal ball, but rather than an analysis based on factors (as also listed in this article). Based on their review of their predictions from last year ,they did "ok" in what is a "it doesn't take a genius to figure out these guys are in trouble" kind of list.
One of the things you can't know is what a company has in the oven so to speak.
Take RIM if they don't have a new batch of something not released to the public then they are toast (Burnt toast at that).
If they do they might survive. I use the word might because in 1962 Studebaker announced the Avanti which got rave reviews and was expected to be the savior of the company. However, poor quality and inadequate levels of production doomed both the car and the company.
The same fate can be in store for RIM even with innovative technology.
American Airlines has declared bankruptcy before and this time its just an 'accounting trick' so that pensions are not honored. They will still be around for years.
WSJ is such a crock. Ever since Rupert Murdoch bought it, you can't believe ANYTHING it says. It used to be reliable news about business. Now it is just GOP Propaganda brought to you by the Criminals at News Corp.
BAN Rupert Murdoch from owning ANY media properties in the US. We don't need HIS type spewing oligarchic lies.
Its not the WSJ.
This list is always terrible, and they take credit where credit isn't due. It's like making the same list about a bunch of really old and sick people, who nearly always manage to live anyway, and then explaining "see! right after we published our list, Beatrice went in for heart surgery!"
It's 24/7 Wall St. Nothing to do with WSJ.
The only thing keeping Sears alive is their sale of appliances and possibly their sale of Craftsman tools.
Ethelouise,
Where are you getting your information from? American Airlines has NEVER declared bankruptcy before (this is the first time), and is in fact the only Major American Carrier not to have done so.
What would really be interesting is if they wrote about how Bush Sr, Clinton and NAFTA & GATT got together to rid us of our manufacturing and send companies offshore while they set up the TSA to grope passengers into not flying anymore. That is why American is on this list...and likely the others too...you can't compete with China and India for cheap business practices and slave labor! Oh, and not to mention their sending "students" here to take the few jobs left over since NAFTA! Good luck with your degrees folks...they will be useless very soon if not already!!
It's no surprise that Pacific Sunwear is on that list. I used to love that store, but they sold out like every other store... They used to carry lots of skater/cali style clothes and now it's a bunch of native american/hippie stuff current trend crap like every other store... Forever 21, Wet Seal etc... has it covered... I liked going in there and seeing board shorts for girls... are they there anymore? no... The key to survival isn't always going with the current trend... it's about being unique. They could have one section of the store be trendy and still be unique.... The only thing I bought there was some jeans on clearance... otherwise haven't shopped there in many many many years.
Well, these companies could just stick their hands out and get a few billion dollars from the US government. The government is in the business of bailing out large corporations right?
Sad.... we shouldn't bail out any corporation as far as I am concerned.
The CEO's will be fine.!!
The CEOs will go over to another company and bankrupt them. So yes ... the CEOs will be fine.
That won't happen except for maybe AMR but even that is dubious. None of these companies are deemed "too big to fail" and none of them have the money muscle to get them bought up with govt help. They also aren't integral to the american workforce like three of the world's largest auto manufacturers are. And RIM is Canadian anyways, so it wouldn't get a bailout from our government.
@ Give it a rest & It's about time Although I tend to agree...it depends, I a company let's say Boeing or Grumman are working on a vital black project for DOD or some other similar scenario they should be bailed out.
There are always exceptions.
Thank you for having good sense brian! The reason we bailout the car companies, who by the way, are doing well, is so many millions of American jobs depend on the auto industry.
As to the banks, well a Republican (since they were they ones who voted for it) would have to tell you why we gave the banks 7 TRILLION dollars so they could turn around and give it to the top execs as bonuses. There didn't seem to be alot of job creation or even job retention involved, just rich people who failed at their job, getting even richer. It was a "redistribution" of wealth.
Ycaintuseait5-3858621
I understand where you are coming from... but as the GOP has taught me.. "its not my fault if you cant run your life without government assistance". So, I still stay, let them fail.
It'sabouttime, and that is why the GOP is so out of touch with the American people. Government is not their to make sure the wealthy are protected, government is supppose to be for the P-E-O-P-L-E, that includes people of all economic groups. The auto industry "loan" worked well, it protected millions of American jobs. The American auto idustry is thriving. Unlike the bank bailout didn't protect or even create jobs.
This concept that government is bad just baffles me. Look at countries without government, Drug Lords and "real" Thugs run the countries. Famine, poverty, death is a way of life. I am PROUD to live a country where the government provides stablity and safety and provides for the commons.
I just watched "Act of Valor" last weekend. How fortunate we are that we don't worry about our schools being terrorist targets. Why? because we have a stable government! We have laws, police agencies, government agencies all working tirelessy to make sure we are safe each and everyday.
No worries, Romney will bailout American Airlines. No worries...Romney will also hold a collaborative summit at one of his six homes around the country where the largest banks will help American Airlines implement creative fees to be imposed to raise revenues and save the airline. It's not like you can't fly Delta, US Air, Air Tran, Jet Blue, Southwest, United, or a slew of other regional carriers.
I thought Research in Motion was a Canadian company???
And I was hoping to get a RIM job.
They are, obviously the author of this article needs a geography lesson. Either that, or the title of the article should be changed to read North American instead of just American, since American implies US to pretty much everyone. While a few of these predictions may come true, they have guessed wrong on companies going away in the past and likely have a few of these wring as well.
They were refering to American Airlines when they said American in the title, That would have the biggest job loss. But someone else will come along and pick up their routes.
They are not saying these companies will absolutely go out of business - rather they are saying they are unlikely to be operating under these names - e.g.: RIM might be sold to HTC as aluded in the article. Did you guys actually read it?
The article is title "Bye ,bye American... and other brands that likely wil be gone in '13" The American part is refering to American Airlines. Even if it wasn't refering to them which it is the fact that they say AND OTHER BRANDS would imply that they do not have to be U.S. brands. I guess reading comprehension is hard for some people though
Oh an for those that doubt some of these brands will be gone, I have a funny feeling that's why it says "likely" in the title. That right there should tell you that it is not a sure thing and just a prediction based on statistics.
Actually the first paragraph of the article says that these are American companies, which as mentioned above, usually implies US companies. "Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year." And yes RIM is a Canadian company as mentioned by the OP.
If we are going on statistics here, then the only 'likely' thing is that this list will be completely wrong like it usually is. I mean, hell, when is the last time you've seen a Kia, T-Mobile store, Blockbuster, or Merrill Lynch? Those all disappeared back in 2010. Ohhh, wait..
It is. RIM is in Ontario
Research in Motion should adopt a new slogan by borrowing a line from Cee Lo Green..."I guess she's an XBox, and I'm more an atari."
I couldn't wait to get rid of my POS blackberry...it was worth every penny of the early contract termination fee to be rid of that archaic device.
Everyone I know that has one feels the same, they all say "I can't wait to get rid of my sh!tberry."
Dongleberry?
This article is incorrect right off the bat. If/when USAirways buys American, they are keeping the American name and branding because of its global cachet. So "American" as a "brand" (using the commercial and legal/intellectual property definition of "brand") will most definitely survive.
Greg does the word "likely" mean 'definitely' in your mind? That's the only way that the article is incorrect right off the bat since the title says "likely will be gone". You also use "If/when" as if it just means 'when'
"Likely" is an incorrect statement. If US Airways buys American, they have already agreed that the American name would survive. So that's a guarantee. If American remains a standalone carrier, that means that a bankruptcy plan was drawn up acceptable enough to creditors to overcome a US Airways bid, meaning American would survive as a standalone carrier, and obviously keep its name. Either way, that's a guarantee that in 2013, the American brand will live on in an operating airline.
Obits:
Blackberry: Once great: got cocky
Talbots: Overpriced clothes for little old ladies
Current TV: Only on the list because of Al Gore. Never heard of it.
Pac Sunware: Forgot that baby boomers are all old and no one wears a size 3 anymore
AA: Pissed all over customer service instead of looking at the business model of Jet Blue and/or SW Airlines and threw up their hands and said I give up.
Well, even little old ladies need overpriced clothes. Certainly don't want to buy cheap clothes that fall apart from Forever 21.
Even little old ladies need overpriced clothes. I don't want to buy cheap stuff from Forever 21.
American Airlines will no longer exist as it currently does, but as Greg MP above correctly stated - USAIR has already stated that the new airline would still be called "American" and that the corporate headquarters would remain in Dallas-Fort Worth.
Personally, I am in favor of this proposed merger for 2 primary reasons-
1) American's internal corporate culture is necrotic and Management must be replaced. Having lived in the Dallas area for nearly 30 years - I have never seen
a company with worse employee relations and labor issues. American is the diametric opposite of Southwest Airlines when it comes to employee relations and
'positive' corporate culture. (and Southwest actually is more heavily unionized !)
American is doing something wrong, especially when it comes to their employees.
2) American cannot survive losing premium global business travelers over the long-term in terms of scale to the new 'super' carriers of United and Delta.
They've got to be able to compete and a merger in bankruptcy is the only way
to successfully gain back that lost position as the industry leader.
The USAir-American combination would become the largest airline surpassing
both United-Continental and Delta-Northwest. This is a no-brainer.
For me to read that American is being hurt by United is historic. United was once the height of hubris and disorganization.
American Airlines will survive and flourish. I don't see it going away.
So What????? EGore TV died Wup Wup
If the author's figures are correct, Talbot's is netting around $4 million off approximately $1 billion in annual revenue. I think the billion in sales has to be the attractive component to the suitor, but I had no idea Talbot's was that popular.
Management's profit margin is laughable.
RIM is a Canadian company.
The article is title "Bye ,bye American... and other brands that likely wil be gone in '13" The American part is refering to American Airlines. Even if it wasn't refering to them which it is the fact that they say AND OTHER BRANDS would imply that they do not have to be U.S. brands. I guess reading comprehension is hard for some people though
Yep, that reading comprehension is tough so perhaps you should practice some more. If you actually READ the article the very first sentence says, "Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year." Kennyboy is right, RIM is Canadian.
And they did Nokia last year, which is in Finland.
Bain Capital must be licking there chops on the American Airline going out of business sale.
I would hate to see A&W go away. Its products are alot better than McD's or BK. I think if it was bought by someone with they style to market it right, it could make an amazing comeback. The only reason its not doing well is because of the brain dead idiots of yum brands. I predict that it wont be long before KFC and TB will fall to the way side as well. With less than inovative leaders how can they keep going?
Airlines are going to continue to dissapear until 1 or to airlines has a monopoly on it . Then they will be forced to break up again under Government regulations.
Pacific sunwear is just another victim of stolen designs by the Chinese who uses slave labor to make cheap copies. By the way have you noticed that alot of Chinese made products are being recalled by the vendors.
These predictions are crap and bogus. Just another editor giving his own opinion and predictions. RIM - what - really? Just because it's not a community trendy phone? RIM isn't going anywhere and at least they have more than one phone. The IPHONE sucks just like this article. Let the company and time speak for themselves.
Most phone makers have more than one phone, Apple is the only one I know of that only make one type of phone, and they have many other products that are not phones.
Gore, Olberman, Behar - hope we don't hear from them again.
Limbaugh, Hannity, Savage, Ingraham, O'Reilly - wish they would all go away.
Research In Motion American? Hello! It's a high-tech company with "headquarters in Waterloo, Ontario, Canada and offices in North America, Asia-Pacific and Europe" as is writen on their web site. Everyone can check it here:
The article is title "Bye ,bye American -- and other brands that likely wil be gone in '13" The American part is refering to American Airlines. Even if it wasn't refering to them which it is the fact that they say AND OTHER BRANDS would imply that they do not have to be U.S. brands. I guess reading comprehension is hard for some people though.
Yep, that reading comprehension is tough so perhaps you should practice some more. If you actually READ the article the very first sentence says, "Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year." Hemusbull is right, RIM is Canadian.
Yep, that reading comprehension is tough so perhaps you should practice some more. If you actually READ the article the very first sentence says, "Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year." Hemusbull is right, RIM is Canadian.
I'm sure Super Mitt will save em all. Or at least tell us he can save em all. Or at least thinks he can save em all. Oh what the heck...he'd change his story many times ....to fit the situation and make a ton of money and want to go into politics....
What's with the hating on Mitt Romney and Bain Capital. Bill Clinton recently at a New York fundraiser ... in an interview, said "I'm not going to say that he did bad work at Bain Capital ... he went into a company, tried to streamline it and make it viable ... he did good work! ... I don't have to personally attack him just because I don't agree with his politics"
He did great work with the companies Bain invested in.............. for Bain. They went in, ran up the company debt, siphoned out their investment + 150%, all prior to the company going belly up and laying off the entire workforce.
That makes for a pretty paycheck that gets directly deposited into a Cayman account.
What a scoop!
I wish walmart was on the list.
Remember Woolworth's, Kmart and Sears? Just wait, Walmart will join them one day.
I have to agree with leftistidiot on the Yum brands.....idiots that have no business being in business. A & W makes a good product. They just seem to have somewhat poor locations.
McD's suxs and the last time I went to BK I got sick from the burger. Wendy's is the best here in the midwest.
The idea that companies will or should be around forever is silly in a culture as fickle as ours where "capitalism" is the order of the day.
Make a good product, market it well, price it fairly and you will survive.
Exactly, Ed, that's capitalism.
American Airlines dissolved now there is music to my ears i hate this airline worse than any other it treats its customers like crap... has been my experience.
The title on the front page was likely an error—these are not all American companies, as some have already pointed out.
The article is title "Bye ,bye American -- and other brands that likely wil be gone in '13" The American part is refering to American Airlines. Even if it wasn't refering to them which it is the fact that they say AND OTHER BRANDS would imply that they do not have to be U.S. brands. I guess reading comprehension is hard for some people though.
Yep, that reading comprehension is tough so perhaps you should practice some more. If you actually READ the article the very first sentence says, "Each year, 24/7 Wall St. identifies 10 important American brands that we predict will to disappear within a year." Andres is right.
Thought I might see the United States Post Office at the top of this list.
Not yet but if Romney wins and has a majority I'm sure the GOP will try and bankrupt the USPS like G.W. Bush tried when they made the USPS pre fund retirement benefits for the next 70 years. Seriously, the USPS must fund retirment benefits for employees that they haven't even hired yet and some that likely haven't even been born yet.
No surprise there, their product is expensive and substandard. Aeropostle carries similar styles at similar prices and they don't fall apart the second time you wash them.
This is what happens when a few people has all the money. The working poor, the middle class and the lower class are the drivers of the market. Money should never flow from the top down but from the bottom up. How many cars can a millionaire or billionaire buy in a year - maybe one? But the working people and the middle class are the consumers of all products on the earth - we pay our fair share in taxes and feel guilty when we cheat. We also are the fairshare givers for the volunteer work - helping the homeless, working in the hospitals or feeding the hungry. Most of us were raised by our parents to share with those less fortune.
The reason these companies are going belly up is because they forgot to appeal to the needs of the the real Americans - the working poor, the middle class and the lower class. If it was up to me - I would vote to lower the salaries of the CEO, CFO and all the other "Os" and go back to the basis - caterering to the real job creators -the American consumers.
How are these? Last years list...
10. Nokia
9. Soap Opera Digest
8. MySpace
7. Kellogg's Corn Pops
6. Sony Ericsson
5. Sears
4. American Apparel
3. SAAB
2. A&W
1. Sony Pictures