Plenty of companies have managed to turn failures into opportunities -- others simply take a long time to go off the rails.
While many companies have managed to turn failures into opportunities and start anew, coming out the other side on top, others simply take a long, long time to go off the rails. Minyaville has profiled five such corporate cases that we’ve respectfully dubbed “slow-motion train wrecks.”
Research In Motion
“We are no longer a company that is innovative and energetic, we are drowning in paperwork.” That statement came from a high-level executive in an open letter to RIM’s senior management in July 2011. The letter ran down the why and how behind the telecommunication giant’s downfall in an attempt to save it.
Two years prior, RIM (RIMM)was still staying afloat in an increasingly competitive smartphone market. But its BlackBerry OS was starting to show its age next to outperforming Apple (AAPL) and Google (GOOG) products. Meanwhile, RIM’s CEO duo was reticent to admit the obvious change within the industry, congratulating each other as their stock plummeted and, rather than learn from the competition, they were “constantly mocking iPhone and Android.”
RIM finally started to innovate with its next-generation QNX, but the tablet -- launching without a native email client -- was too little and BlackBerry 10 -- slated to debut at the latter half of this year -- is still too late. Ninety percent of RIM’s market share has been lost since mid-2008 with deeper valleys still expected on its horizon.
Many American corporations can survive bankruptcy. Take most of our major airlines. Heck, US Airways (LCC) even did it twice. But video rental chain Blockbuster doesn’t look destined for the clouds. This one’s set on a course to crash and burn.
At-home streaming may have been the final nail in the coffin, but Blockbuster’s fate was sealed, for all intents and purposes, in 1999 when Netflix (NFLX) launched a brand-new subscription-based DVD delivery service. “Already two steps behind the tastes of the home viewer,” wrote Minyanville’s Mike Schuster, “Blockbuster stumbled so late to the video streaming game that Netflix had already commanded the service with dependability and name recognition -- giving it a lead that Blockbuster could never reach.”
Being acquired by Dish Network (DISH) in April 2011 didn’t help to resuscitate the brand. More than 500 stores will be shuttered by the first half of this year. This leaves just 1,000 blue and yellow awnings hanging in our nation’s strip malls.
Eastman Kodak (EKDKQ) should never have fallen victim to the age of digital photography. The beloved American company, whose products have preserved generations of memories, not only saw the future coming, it helped pioneer the technology to bring it to life -- while ironically hastening its own death.
In 1975, it was a Kodak engineer named Steven Sasson who developed the world’s first digital camera: an “8-pound, toaster-size contraption, which captured a black-and-white image on a digital cassette tape at a resolution of .01 megapixels.”
But Kodak sat on the invention for 26 years, instead hoarding digital-imaging patents over which it would someday sue the likes of Samsung, Apple and HTC. Kodak continued to butter its bread with analog film through the late ‘90s, even as the medium was on the brink of extinction.
In 2001, Kodak finally took its head out of the sand and mass marketed a digital camera. But before long, Asian competitor Fuji (FUJIY.PK) would capture market share with cheaper products. Of course, smartphones would also soon evolve enough to have all dedicated cameras headed for the endangered-species list.
Less than two months after filing for Chapter 11 bankruptcy, Kodak is currently trading around $.31 a share. Its last ditch effort, with help from a $950 million Citigroup (C) loan, is a restructuring plan that focuses on digital printing and ink.
(See also: Kodak Reshuffles Decks, bgut Should Take Notes From Fuji's Playbook.)
What article about corporate train wrecks would be complete without a literal example?
Despite increases in ridership and revenue over the last 10 years, the government-owned enterprise finds itself in the red year after year to the tune of $1 billion. As its own newly-minted president, David Gunn, testified in 2002 before a Senate committee, “Amtrak will never be profitable.”
With the exception of a handful of metropolitan areas, American passenger rail is wholly underutilized -- and for good reason. It’s outdated, tortuously slow, and inefficient. While Amtrak’s Acela, which only serves the Northeast Corridor, tops out at 150 mph, China’s CRH380A bullet train leaves it in the dust with twice those speeds.
A national high-speed rail network was to be the crowning achievement of the Obama administration. Derailed largely by Congressional Republicans, a 220 mph line in California between Bakersfield and Merced is still on the table. Public monies will fund the the California High-Speed Train Project but sizeable investments are expected from the private sector, including General Electric (GE).
With annual ridership on the entire 800-mile high-speed network estimated between 88 and 117 million by 2030, the California project, like bullet trains throughout the world, will likely generate a surplus.
30 Rock may play fast and loose with reality, but it’s depiction of the budgetary woes facing its parent network is far from fiction. Remember the bizarrely coincidental airing of the Kabletown buyout episode (complete with the replaced GE logo) on the same night as the NBC-Comcast (CMCSA) merger?
Well, the same NBC that pays “The Girly Show’s” bills continues to struggle in the ratings as much as the one that owns the real-life sitcom. For the last several years, NBC has ranked fourth among the major networks. In 2009, the peacock didn’t do itself any favors by giving Jay Leno the 10 p.m. EST time slot five nights a week. Examples of “overblown, over-budgeted, and often over-cast” fare are aplenty with My Own Worst Enemy, The Bionic Woman, Raines, Heist, and Studio 60.
After a string of unsuccessful new shows, the death knell was rung in 2004 with the series finales of Friends and Frasier. It was the end of the Must-See-TV era, which is truly unfortunate considering current ratings-worthy Thursday night offerings like Parks and Recreation, Community and the aforementioned 30 Rock.
Even as Comcast managed to beat analysts' fourth-quarter estimates with a 26% profit, NBC’s revenue slid 3.7% to $1.8 billion.
“Every Day Is Full of Color,” so says the NBC slogan. That color? Red.
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