The worst (and best) company name changes
What does a century-old brand do when it grows out of the very business that inspired its name? After announcing in December 2013 that it would shed $5 billion worth of its commodity chemical business, Dow Chemical (DOW) will have to figure that out.
The company is focusing more resources on higher-value specialty materials products like semiconductors for cell phones and moving away from the lower-margin chlorine business. In turn, executives are considering ridding “chemical” from its title as well, according to a company spokesperson.
Chief executive Andrew Liveris told the Wall Street Journal that a potential name change would hopefully help position the company as one linked by “chemistry rather than chemicals” as it transforms.
But as corporations evolve their strategy, their brands can change too — for better or for worse. And if history is any indication, an identity change followed by a title switch can cause a company more trouble than it’s worth. Corporations spanning industries as diverse as technology to defense have all rebranded themselves only to the peril of their businesses. While some have successfully navigated the dangers of a new title, these instances prove to be the exception rather than the rule.
“As long as they keep Dow … as long as they don’t change that name, the company will not suffer from dropping chemical from its name,” said Deutsche Bank Equity Analyst David Begleiter.
Read on to discover seven companies that found out firsthand how challenging a name change can be.
Research In Motion to BlackBerry (2013)
In January 2013, Research In Motion announced that it would change its name to BlackBerry (BBRY) after the widely known smartphone device. Executives made the announcement in tandem with its new mobile platform, BlackBerry 10, hoping that they could revitalize the declining brand. Despite the change, BlackBerry did not follow up with a significant change in strategy, and the stock price continues to suffer as a result, said James Moorman, an analyst for S&P Capital IQ.
“The fact is that a name change doesn’t matter when no one buys your new hardware. So in this case it was a bust,” Wedge Partners Principal and Senior Research Analyst Brian Blair told Fortune.
Blackwater to Xe Services to Academi (2009, 2011)
A series of hazardous events forced the security contractor formerly known as Blackwater to change its name not once, but twice. In 2007, Blackwater guards were accused of manslaughter in connection with a shooting that killed more than dozen civilians in Iraq. Two years later, the company changed its name to Xe Services. After the company was sold in 2010 to a group of private investors, its title was changed once again to Academi. Then-chief executive Ted Wright told the Wall Street Journal that the second name change was an attempt to make the company more “boring.”
“You’re not going to see me in headlines,” he added.
You might not see Smith in headlines anymore, but you do still see Blackwater. News organizations such as the New York Times and The Economist continue to run stories that refer to the company by its old name.
Apple Computer To Apple (2007)
Apple (AAPL) stands apart from its peers as one of the few examples of a successful name change. “We’re going to make some history here today,” former CEO Steve Jobs said in a speech in 2007. With that, he not only announced the first iPhone, but also said that the company was dropping the “computer” from its name. It would go on to be the company’s most lucrative product.
Apple made the name switch because it in essence “saw the writing on the wall,” said Cantor Fitzgerald analyst Brian White. In 2007 computers comprised 42% of its revenue and now that number has dropped to just 13%, according to White.
“[A name change] sets the tone for a company as they evolve,” White said. “You wouldn’t make a change like that unless you were very confident in the strategy and where the company was headed.”
Philip Morris to Altria (2003)
Cigarette maker Philip Morris Companies changed its name to Altria Group Inc. (MO) to ensure that consumers knew that it was “more than a tobacco company,” a senior company executive told the New York Times in 2001. (At the time, the holding company was also the owner of Kraft Foods (KRFT) and the Miller Brewing Company.) However, critics felt the name change was a public relations move to distance the company from the hazardous product for which it became known.
“The name Philip Morris became synonymous with cancer sticks,” Wedge Partners’ Brian Blair said. “Did it change the product? No. It just helped erase some of the bad feelings associated with the prior brand.”
Andersen Consulting To Accenture (2001)
Andersen Consulting’s evolution to Accenture (ACN) was initially received poorly, but in the end proved to be a smart move. After the consulting business separated itself from the accounting firm Arthur Andersen, the company was forced to change its name. In 2001, many criticized the firm for making up a new word for its name; a senior manager from Norway came up with it by thinking of an “accent on the future.” But having an eccentric title was fitting to the company’s profile, said David Koning, a research analyst for the financial services firm Robert W. Baird.
“There are a lot of well-known words that probably weren’t around 20 years ago, and they are now right at the heart of technology changes, just like Accenture wants to be,” he added.
In 2002, Arthur Andersen was found guilty of obstructing justice after destroying documents affiliated with the Enron scandal, tarnishing the name forever. (The conviction was overturned in 2005.) Andersen Consulting was a separate legal entity from Arthur Andersen, but Accenture’s timely name changed allowed the firm to escape Andersen’s “brand destruction,” Koning added.
BackRub to Google (1997)
It may surprise some to know that when Google (GOOG) first began, it wasn’t even called Google. Founders Larry Page and Sergey Brin named their first search engine BackRub in 1996. A year later, BackRub became too large to operate on the Stanford University servers that hosted the website, so they registered the domain name Google.com.
Google’s ability to turn its title into a verb — as in, “Google it” — helped the company succeed tremendously, said search marketing consultant David Mihm.
“Had they stuck with BackRub, I can imagine “Oh, you should just ‘Rub it’ might have developed, but that doesn’t have quite the same ring to it,” he added.
Datsun to Nissan (1981)
In the U.S., trucks made by the Japanese automaker now known as Nissan were marketed under the Nissan brand — but small cars were branded as Datsun until 1981. After selling 20 million cars in 190 countries, the company made the difficult decision to drop the Datsun name (which originated in Japan almost a century ago, and comes from the Japanese word “DAT” for lightning fast) from its U.S. operations to unify its global brand. The “controversial” move was highly criticized, given the importance of brand association in the car industry, said Bill Visnic, a senior editor for car research company Edmunds. The endeavor was also expensive and took roughly six years to complete.
“You see cars using the same name for decades and generations because it is critical to make it clear to people where the car came from,” Visnic said.
Ironically, Nissan has decided to resurrect the brand and will unveil the “first new Datsun car for the 21st century” in 2014 in countries like India, Indonesia, Russia, and South Africa. The company made the move because sub-brands are largely “in style” now and car companies are using them to promote vehicles they don’t necessarily want to be associated with their original brand, Visnic said.