Oh, how Supervalu tried its darndest to stage a turnaround. The perennially struggling grocery chain first cut prices to attract shoppers. When that didn’t work, it fired CEO Craig Herkert and hired a new one who blared in an email to workers, “We will prove the naysayers wrong.” Supervalu put itself up for sale. When no one wanted it, Wall Street left it to rot.
Shares plunged 68% during the year. But in an encore befitting of the Street’s odd relationship with deeply indebted companies (of which Supervalu is one, after its misguided $12 billion acquisition of Albertsons in 2006), there’s talk anew of a turnaround. Supervalu shares are up 110% so far this year.
Before Blackberry’s flameout in the U.S., there was Nextel. Its walkie-talkie push technology lost relevance and eventually succumbed to the great smartphone revolution. But NII Holdings escaped obsolescence.
The international unit of Nextel, NII thrived in places like Brazil and Mexico. Or at least it did until recently. When Latin American consumers increasingly demanded smartphone features last year, NII began reliving its U.S. nightmare. The company lost more than $750 million and shares crashed by 67%.
Advanced Micro Devices
AMD has trailed Intel for years in the chip wars. But now that PC sales are turning downward, AMD may be even more vulnerable. The computer industry is undergoing its worst period of the last 20 years and AMD’s processors aren’t in demand.
The No. 2 company in any industry always hurts more in a slowdown because it enjoys fewer economies of scale. The problem multiplies for AMD because its tablet processor sales aren’t anywhere close to filling the hole left by PCs. AMD lost $1.2 billion last year and shares fell by 56%.
Alpha Natural Resources
When China sneezes, the world catches a cold, goes the saying. If you accept the premise, then coal producers get violently ill when things turn in China.
Such was the year for Alpha Natural, which specializes in the kind of coal China consumes for steel production. Prices for the commodity fell the entire year. Alpha’s ill-timed $7 billion acquisition of Massey Energy in early 2011 further weakened the company’s bottom line. Shares fell by 52%.
Stop us if you’ve heard this one before. CEO of a struggling company has inappropriate relationship with a subordinate. Said CEO is fired. The company continues spiraling downward. Welcome to Best Buy’s nightmare year.
If fighting against powerful rivals Amazon and Wal-Mart wasn’t enough, Best Buy cycled through two CEOs last year amid the scandal before settling on the former top guy at Radisson hotels and T.G.I. Friday’s. At the same time, founder Richard Schulze was campaigning to take the retailer private via a leveraged buyout that never materialized. Investors grew sick of the drama. Shares fell 47% last year.
AK Steel Holding
AK Steel is suffering from what those on Wall Street call a ‘crisis of confidence.’ After touching $70 a share in 2008, AK Steel has fallen to just under three bucks. Last year steel pricing was terrible, demand was weak, and AK’s shipments to rejuvenated automakers couldn’t save it from disappointing investors.
Add in a broken pension, suspended dividend, and weak construction sales around the world, and you understand why shares tumbled by 43% in 2012.
HP’s year was like a slow-motion car wreck no one did anything to stop. The honeymoon for CEO Meg Whitman was long gone, and she still hadn’t changed the perception of HP as a PC giant sliding toward obsolescence. Wall Street began describing HP more for what it is not than what it is: No smartphones, no hot consumer devices. Only aging printers, PCs, and servers.
The perception will be hard to shake until HP is actually something more. The stock sank by 43%.
Ron Johnson’s firing this spring is the coda to a disastrous year-and-a-half experiment for JC Penney. The former high-flying CEO, flush off his Apple retail success, plied his expertise at the old-line retailer. A reasonable pricing strategy was his antidote to disappointing sales.
Problem was, customers hated it. JC Penney is a decidedly middle-class shopping destination, and Johnson never fully grasped that shoppers who have lost their jobs and cut budgets want to see “clearance” signs, if only out of comfort. Penney paid dearly for its oversight. It experienced four consecutive quarters of declining sales in 2012. The stock tanked 43% in 2012, and Johnson was ousted in April.
After a decade of failures developing a new diesel engine technology, Navistar paid dearly last year. Former CEO Dan Ustian banked on the technology to help Navistar meet new EPA emission guidelines.
In 2012, more than two years after a deadline passed for compliance, he admitted defeat, adopted existing technology, and Navistar posted a $3 billion loss. Future orders plummeted and Ustian left the company in August. Shares swooned 43% during the year.
Pitney Bowes proudly offers postage meters, mail machines, shipping, address mapping and other postal services. Not a great business, then, when the U.S. Postal Service itself lost $16 billion in 2012. Mail volumes are only headed one direction, and while Pitney has diversified into printing and others businesses, it’s mostly a play on mail, which isn’t Wall Street’s favorite bet right now.
The stock has declined ever since 1999, and fell by another 36% in 2012.
The maker of specialty metals for aerospace and energy markets had to continually lower expectations throughout the year. Weak demand caused prices for such things as cold-rolled steel, which is used to make car bodies, and zirconium, which is used in the linings of furnaces and reactors, to drop. Allegheny’s earnings for 2012 fell by a quarter. Its shares followed.
Cliffs Natural Resources
China has been the largest consumer of steel for a while. So if you are the largest producer of the thing that is used to make steel, Iron-ore, and China slows down, you know it’s not good. That’s what happened in 2012 to Cliffs Natural, which is the largest U.S. producer of iron-ore. Worse, mining costs in general rose.
None of this was good for Cliff’s bottom line, or its shares. Economists are now debating whether China is in the process of rebounding, or heading for a long-term bust. That probably means more uncertainly for Cliffs’ shares.
Four years of losses at YRC Worldwide, once the largest publicly-traded trucking company, led to a restructuring in 2012. Formed in a roll-up of other trucking companies, YRC’s revenue hit a high in 2009. But debt piled on by those acquisitions left the company vulnerable after the financial crisis. The shipping business declined. Other customers shied away from using YRC because of fears about its high debt.
In 2012, executives decided to swap some of the company’s debt for equity, issuing more shares. That should put the company on better financial footing, even as current shareholders take a hit.
R.R. Donnelley & Sons
The Internet killed the printing star. After slumping in the recession, R.R. Donnelly, the U.S. biggest commercial printer, was expected to see a turnaround in 2012. Instead, the company’s business has continued to erode as more content moves to the web. R.R. Donnelly’s financial products and magazine printing divisions have been hurt the worst.
To help offset those declines, R.R. Donnelly acquired Edgar Online, which put financial documents online. But that company has struggled as well, and investors mostly shrugged off the acquisition.
Shares of the No. 3 computer maker slumped to a three-year low in 2012. Dell is struggling as smart phones and tablets make computers less essential. At the same time, companies are putting off upgrades due to the weak economy. CEO Michael Dell has tried to diversify into networking gear and services, but the company still gets half its sales from PCs.
A plan to buyout the company by Michael Dell and private equity firm Silver Lake has buoyed shares somewhat. But a deal isn’t certain. Dell’s largest outside shareholders opposed the deal. Blackstone, which also bid on Dell, recently backed away from its offer.
Exelon is the largest U.S. nuclear operator. In the wake of the Japan tsunami you would expect that to be somewhat of a scarlet letter. But that actually is not what has been battering the company’s shares. The continued weak economy and low gas prices are really hurting the utility, which provides power to 6.6 million homes in Illinois, Pennsylvania and Maryland, mostly through the wholesale market. That’s driven down both demand and wholesale power prices at the same time.
For the first few years of the recession and recovery, Exelon benefited from a number of long-term power distribution contracts that locked in higher prices. Now those contracts are ending. To boost profits, Exelon bought Constellation Energy, which sells electricity directly to customers, in 2012 for $7.3 billion. But analysts and investors are skeptical the acquisition will pay off.
The New York-based commodities broker, which has 10,000 customers around the world, specializes in helping other companies mitigate the effects on their profits from a jump or drop in the prices of raw goods. That, however, doesn’t extend to the company’s own bottom line. Falling commodity prices led to a 60% drop in FCStone’s profits. Investors didn’t react kindly, selling the company’s shares.
Profits dropped nearly 25% at Nash-Finch, one of the nation’s largest food distributors. The Minneapolis-based company is one of the biggest suppliers of food to military bases and grocery stores. The former was a good segment for the company for a number of years. But sales dropped in the wake of the U.S.’s pullout from Iraq, and scaling back of operations in Afghanistan.
Also food prices didn’t rise as fast in 2012 as they did the year before, and that hurt profits. The company did acquire value-minded grocery chains Bag ‘N Save and No Frills, which helped sales, but have yet help its bottom line.
You know the economy is tough when even closeout stores are having trouble making a buck. Profits at Big Lots, which sells the stuff that other retailers and manufacturers want to get rid of, plunged in 2012. The company said it was due to rising competition from online retailers and the fact that fewer of its customers were going for such bigger ticket items as furniture, which have higher profit margins.
Big Lots says it is looking into adding coolers and freezers to its stores to stock more food items, though presumably, or hopefully, not really old or unwanted food. In December, chief executive Steve Fishman announced he would retire. At the same time, it was revealed that Fishman was under investigation by the FBI for insider trading.
This oil and gas company was an early adopter of technologies that have opened up massive deposits of oil and particularly natural gas from dense rock around the country. It has also been one of fracking’s biggest corporate victims. An acquisition spree left the Oklahoma City-based company vulnerable when gas prices plunged amid growing supply and stayed there in 2012.
Mid-year it was uncovered that the company’s long-time CEO Aubrey McClendon was taking personal loans from companies that did business with Chesapeake. Shareholder activists led by Carl Icahn took over the company’s board, and earlier this year, McClendon was forced out. Chesapeake is still looking for a successor. Unsurprisingly, none of this has been good for the company’s shares.