These firms had a very bad, no good year.
Meg Whitman inherited a company in turmoil in the middle of 2011 and the new CEO admits that a turnaround is taking longer than expected. In an industry that is increasingly shifting away from PCs to mobiles and tablets, HP’s sales have tanked, down 7% from last year. The company also planned to layoff 29,000 jobs over three years and it’s currently about halfway done. In the midst of continued doom and gloom, HP had to take an $8.8 billion charge after “serious accounting improprieties” were discovered at Autonomy, the British software firm it had recently acquired.
Despite higher revenues, the country’s third largest wireless carrier (behind Verizon and AT&T) suffered a $4.33 billion net loss in fiscal 2012. Much of the loss was attributed to its shutdown of the Nextel network, coupled with a $45 million loss due to damages from Hurricane Sandy in the New York metro area. While the company added a total of $1.5 million postpaid subscribers in the year, it lost little over a million customers in the Nextel shutdown, after failing to convince them to switch over to its own network.
The Virginia-based IT services provider suffered a huge $4.2 billion loss last year after having to record several write-offs on underperforming projects, the biggest of which was its disastrous contract with the U.K.’s National Health Service (which cost it $1.5 billion). Mike Lawrie, who took over as CEO in 2012 was charged with turning around the company and he responded by selling off multiple businesses and reducing management layers. The company is slowly recovering; it posted a healthy profit of $513 million in this year’s first quarter, up from a loss of nearly $1.4 billion in the same period last year.
The still sluggish economy caused people to delay medical procedures and governments to cut spending on healthcare, resulting in an industry wide slump for medical device makers. Couple that with layoffs and increased scrutiny over the use of its machines, medical device maker Boston Scientific didn’t have a great year. Sales declined nearly 5% from last year, most notably in its cardiac rhythm management (which makes defibrillators and pacemakers) and interventional cardiology devices (such as stents).
Energy Future Holdings
In 2007, the former TXU Corp. was taken private by a group of private equity firms in a record breaking $45 billion buyout. But since then the power company has caused major problems for its investors, struggling under low natural gas and energy prices and losing more than $18 billion in 5 years. With a potential bankruptcy looming, Energy Future Holdings recently proposed a debt restructuring plan that would eliminate about $32 billion in debt and allow its private equity owners salvage at least part of their investment.
Military and commercial vehicle maker Navistar has struggled the past few years to keep up with the ever-changing auto industry. After the Environmental Protection Agency set new emission standards for automakers in 2010, Navistar struggled to get its engine technology up to par. The company also had its fair share of management shakeups, plowing through two chief executive officers in the past year before landing on its third CEO Troy Clarke, former-COO who replaced Lewis Campbell in March. The good news is things are looking up for the truck maker. Navistar announced a change to its emission strategy in July 2012 and shifted its focus heavily on Selective Catalytic Reduction (SCR) technology. The company recently announced the approval of its SCR-based 13-liter engine by the EPA.
Alpha Natural Resources
The competition is hot for coal-based energy company Alpha Natural Resources. As the push for alternative fuel resources in North America and abroad continues, so does the struggle for one of the nation’s largest coal companies. In September, Alpha Natural Resources announced the closure of several mines in Pennsylvania, Virginia and West Virginia due to a lack of demand and declining coal prices. In its annual 10-K filling, the company cited the shift from coal-fueled power plants to clean-fuel methods (such as natural gas) as a primary reason for the decline in steam coal demand, which accounted for nearly 81% of the company’s coal sales in 2012.
The parent company of American Airlines and American Eagle Airlines is the latest aviation company to undergo restructuring in an attempt to bounce back from years of losses. In November 2011, the company filed for Chapter 11 bankruptcy and has since announced plans for it American Airlines subsidiary to merge with US Airways in an attempt to strengthen the company and boost profits.
MGM Resorts International
The house doesn’t always win in the case of casino resort owner and operator MGM Resorts International. Stiff competition in its domestic markets and the growth of gambling resorts in California and on Native American tribal lands poses a direct threat to some of the company’s most popular destinations like Las Vegas. The quest to keep resorts like the Bellagio and Mandalay Bay go-to tourist hotspots means MGM continues to invest heavily in maintaining and re-vamping its resorts and services— forcing the company to borrow what it cannot afford and pushing it deeper into debt. By the end of 2012, the company had approximately $13.6 billion in outstanding debt, according to its annual report. The company also noted that it continues to struggle with a rough economic environment and subdued consumer spending habits both domestically and internationally.
It was tumultuous year for the gambling giant. With 52 casinos carrying the Caesar’s, Harrah’s, and Horseshoe names, Caesars Entertainment remains the largest casino entertainment company in the world, but its bottom line has suffered in recent years due to the financial crisis and increased competition from other casinos. To wit, the company reported $8.8 billion in sales last year, but lost $1.5 billion. It also amassed $24 million in debt and cautioned in its 2012 earnings that the figure could climb. The silver lining? Caesar’s online gambling businesses helped nudge net revenues up slightly.
Headquartered in Elmwood Park, NJ, Sealed Air offers products and services that include preserving the safety of food and beverages as they’re processed and sold. (Its most well known product may be BubbleWrap for cushioning.) The company lost $1.3 billion last year, chalking it up to the impairment of goodwill and other unspecified intangible assets. In its annual results, President and Chief Operating Officer Jerome Perebere cautioned that 2013 could prove challenging where Europe is concerned, where the company noted a decline in sales.
Advanced Micro Devices
The Sunnyvale, Calif.-based chipmaker was hit hard in 2012, thanks to the rapidly-changing PC market which saw global shipments plunge as much as 8% one quarter. The cause: a saturated PC market and the ongoing transition to tablets as many consumers’ go-to device. As a result, AMD saw earnings plunge 17% with a net loss of $1.18 billion. As part of a restructuring effort announced in the third quarter, AMD is simplifying product development and streamlining its supply chain. It will also focus on areas of opportunity, like the $67 billion global video game market, where its chips will provide the horsepower in Sony’s upcoming PlayStation 4 console.
The grocery store network, which operates over 5,000 locations across the U.S., continues to push forward with its turnaround: an eight-pronged strategy to simplify its business and focus on the demands of each neighborhood. Getting there, however, is proving tough. Same-store sales fell across all three business segments — traditional retail food, Save-A-Lot discount grocery chain, and independent businesses — and this past March, Supervalu announced it was eliminating 1,100 jobs nationwide, or 3% of its workforce.
Since 1978, the Boise, Idaho-based semiconductor company has focused its efforts on memory chips that store data, with most of its business now stemming from their use in personal computers and mobile devices. But ever-increasing competition from companies like Samsung, SanDisk, and Hynix, continue to drive down market prices and played a major role in Micron’s losses for the year.
AK Steel Holding
Steel manufacturing company AK Steel has been reeling from the rough economic conditions for the past 5 years. In its 2012 10-K filing, the company reported it has yet to return to its pre-2009 net sales levels. Sluggish automotive and housing markets also contribute to the company’s slow rebound. In 2012, 45% of the company’s net sales came from the automotive market, up slightly from 36% of sales in 2011 and 2010.
Sales went from bad to worse at the retailer, which floundered with its new—and now former—CEO Ron Johnson at the helm. Annual revenue tumbled 25% in 2012 to its lowest level since 1987. Palo Alto-based Johnson, who made his name as Apple’s retail guru, promised to make JC Penney “America’s favorite store” by 2015, but his makeover —which replaced sales and coupons with “everyday low prices” and prioritized trendy brands and boutiques over longtime staples and the store’s familiar layout—failed to win new customers and drove off some of the loyal ones it already had.
Warm winter weather didn’t help this Midwestern power provider’s bottom line, but a $1.6 billion impairment charge, taken on Ameren’s struggling merchant generation business—ie selling electricity on the competitive market—took the greatest toll on profits. Depressed power prices and the increasing cost of environmental compliance have created such problems for the division that Ameren pulled the plug on its merchant generation business earlier this year.
Not its first year on this list, the ailing parent of Sears and—as one analyst recently put it—the “terminally-challenged” discount big box K-mart saw its six straight year of declining sales in 2012, largely because the company had less inventory and fewer stores. Among the downsizing: Sears spun off its Hometown and Outlet business and shed 18,000 employees last year. While the retailer is trying to make up ground (and catch up to the mighty Amazon) online, it’s still early days for its growing SHOPYOURWAY e-commerce platform.
Problems were local for this global power company. Just one year after it acquired Dayton Power & Light, AES took a $1.82 billion write-off on the Ohio utility, which has lost customers and faces costs and challenges as it transitions to a competitive market system.
Cliffs Natural Resources
The slowdown in China has spelled trouble for iron ore miners: the commodity’s price slipped 23% in 2012 taking the fortunes of this Cleveland-based iron ore producer with it. Cliffs suspended some of its mining operations and took a handful of impairment charges last year because of the depressed demand, including $1 billion on Consolidated Thompson, the Canadian mining operation it acquired in 2011.