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Second Acts in Finance: The 5 Most Astonishing Comeback Stories


Tales of the previously powerful being brought down to earth with a thud only to rise again, are irresistible. Here, a "fierce five" of corporate American comebacks.


We end not with a person but an entire company, although the individual most closely associated with it endured and enjoyed a similarly spectacular roller coaster ride. Impossible as it is to believe now, a decade and a half ago Apple Inc. was in the doldrums. Its market share in US personal computers, at 15.1% second only to International Business Machines (NYSE:IBM) in 1985, stood at a scant 7.9% ten years on. Not only was its principal product relegated to also-ran status, its few remaining adherents found primarily in niche educational markets and not taken at all seriously by Corporate America, but Apple's Newton digital assistant also ended up being an unmitigated disaster. Even the company's flagship Mac offering, introduced to much fanfare in an iconic Super Bowl ad, never actually attained anything like the commercial success of hazy hindsight. Its stock subsequently missed out entirely on a 1990s bull run that saw an astonishing 89,374% increase in rival Dell Inc. (NASDAQ:DELL), whose bare bones, direct-to-consumer approach was the anthesis of the touchy-feely in-store experience Apple would ultimately adopt amid widespread skepticism.

Indeed its share price plunged to as low as $3.30 in the summer of 1997, when one Steve Jobs was summoned back in a move that smacked to some as sheer desperation. Jobs himself had lost a boardroom battle at his own firm a dozen years earlier, squeezed out by John Sculley, and with the intervening rust Wall Street wondered aloud whether he was the right man to stem quarterly losses that stood at some $708 million. "The products SUCK -- there's no sex in them," was the prodigal son's candid assessment upon his return. Yet with the Cupertino company bleeding red ink at an alarming rate and only three months from bankruptcy, salvation soon arrived via the sort of unlikely pairing that seems to occur unusually often in second acts. Arch nemesis Microsoft (NASDAQ:MSFT), in a move Bill Gates must now regret, invested $150 million in Apple thanks to the persuasive powers of Mr. Jobs and the rest is, well, his story. Truth be told, it took Apple over a decade to become today's overnight sensation, but once the firm finally returned to profitability in 1998 after 12 barren years, the hits simply didn't stop. Starting with that spring's introduction of the iMac, Apple steadily began either upending or altogether inventing entire industries. iPod (2001), iTunes (2003), iPhone (2007), and iPad (2010) all followed in swift succession until, in August of 2012 Apple attained a market capitalization of $624 billion, the highest in the history of the world. Sadly, Steve Jobs didn't live long enough to see it, but the visionary would doubtless have enjoyed the ironic identity of the fallen tech titan whose crown Apple had usurped. It was none other than Microsoft, whose stock surged 9,566% in the 1990s en route to hitting its peak during the dying days of a decade in which pesky upstart Apple barely registered as an afterthought. For Apple, making its hated corporate cousin subsequently look like a sad second banana was surely the sweetest second act of all.
Twist in the Tale

"There are no second acts in American lives."

The F. Scott Fitzgerald quote always troubled me. After all, we Americans -- often immigrants who have left the past behind specifically to start afresh -- are all about constant renewal. And Fitzgerald himself gave voice to Gatsby, the very epitome of reinvention. I turned to an English literature expert of my acquaintance for further clarification, and was reliably informed that the author did not, as is mistakenly assumed, mean for one moment to imply that second chances aren't readily available in this country. Rather, in a traditional play structure, act one sets the scene, and by the second act we are at least starting to move toward some sort of resolution. Fitzgerald, however, maintained that, in the United States, nothing is ever neatly resolved and tied up in red ribbons. (Fittingly the line comes not from The Great Gatsby but The Last Tycoon, his final and pointedly unfinished novel.)
No positions in stocks mentioned.
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