9 Great American Companies That Aren't Recovering: 24/7 Wall Street

By 24/7 Wall Street: We examined nine companies whose plans to revive their fortunes have not succeeded and found several common themes. Managements often fail to appreciate the size of the challenges they face. Competition is fiercer than expected and markets change. Further complicating matters are investors who often want results more quickly than companies can deliver. Of course, the line between success and failure is a thin one.

When things go well, as they did in the cases of Apple Computer Inc. and Ford Motor Co., they can go spectacularly well. These happy endings, however, are rare. Turning around failing companies is one of the hardest things for any executive to do.

Here is 24/7 Wall Street's list of 9 corporate turnarounds that have yet to turn around -- and visit 24/7 Wall Street for more information .

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Borders

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Borders Group Inc. (NYSE: BGP) may have a financial white knight, or it may not. Reports were out late last week that GE's finance arm held talks about providing a financial lifeline. Then came word that Borders hired restructuring lawyers. It recently began delaying payments to vendors to conserve cash. Let's pretend that Borders does get a last-ditch financing pact and that it gets its debt refinanced. What really changes? Borders has faced eroding sales and the last sales gain for a year was in calendar 2006 (fiscal year ending Feb. 3, 2007). The new figure was down roughly 30% by even a year ago since then. Borders just trimmed 45 jobs at the corporate headquarters in Michigan and that is on the heels of a fresh plan to close a Tennessee distribution center to cut 310 more jobs. Borders is now a penny stock and its market cap is a mere $64 million. With shares back under the $1.00 mark, a delisting notice is a risk and more problems may be coming its way. For some reason, the Fahrenheit 451 analogy keeps coming to mind. Read more at 24/7 Wall Street.

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Borders Group Inc. (NYSE: BGP) may have a financial white knight, or it may not. Reports were out late last week that GE's finance arm held talks about providing a financial lifeline. Then came word that Borders hired restructuring lawyers. It recently began delaying payments to vendors to conserve cash. Let's pretend that Borders does get a last-ditch financing pact and that it gets its debt refinanced. What really changes? Borders has faced eroding sales and the last sales gain for a year was in calendar 2006 (fiscal year ending Feb. 3, 2007). The new figure was down roughly 30% by even a year ago since then. Borders just trimmed 45 jobs at the corporate headquarters in Michigan and that is on the heels of a fresh plan to close a Tennessee distribution center to cut 310 more jobs.

Borders is now a penny stock and its market cap is a mere $64 million. With shares back under the $1.00 mark, a delisting notice is a risk and more problems may be coming its way. For some reason, the Fahrenheit 451 analogy keeps coming to mind.

Read more at 24/7 Wall Street.

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Comments

[mricle]

08:46 PM on 03/02/2011

It's such a shame. Borders is my fav bookstore. They invented cafe relaxation for their customers only to fall behind B&N in implementing this concept. Hopefully restructing of debt will breathe new life into this well-loved, caring corporation. ***mricle***

[Kiwi2375]

06:10 PM on 02/01/2011

McDonalds' is successful because because they own the most real estate holdings in the world other than the Vatican church. The evil thing is they aren't in the business of selling hamburgers. Burger King, Wendys, Taco Bell and other restaurants can't compete when they build their franchises and restaurants owned by McDonalds. In the end they end up paying the rent on their building to....that's right McDonalds. McDonalds has people who go out and look for high busy traffic spots on corners of intersections to buy land where they could build a McDonalds. They don't always build a McDonalds at these locations they just have to lease and rent the real estate out. Gotta love capitalism right.

[JDJones72]

05:39 PM on 01/26/2011

Apparently Radio Shack is no longer selling things like electronic components such as potentiometers, capacitors and solder so they aren't really an electronics store.

[Joel Grizzel]

09:47 AM on 01/25/2011

Sears is classic coke and should focus on building on that with a Mad Men flair.

[Joel Grizzel]

09:45 AM on 01/25/2011

Radio Shacks day has passed I am afraid. Low traffic. High prices on small items often as well. Internet is where I go. If I were them I would close all but a few and go internet only.

[Rickey Wilson]

09:38 AM on 01/25/2011

I can belive Sprint is going under. I was a customer for 15 years and they forced me to leave over some scam they were running on get two extra lines free. i sent both phones back and they tried to charge me $800.00. They lost me as a customer and the $800.00 and another $400 for shutting off my present service. Never go back to them again.

[Kevin-Haroun]

06:29 AM on 01/25/2011

Fahrenheit 451 analogy? What does that have to do with a bookstore megastore conglomerated media place chain going under? The mom and pop bookstores going out of business is more analogous.

[Ladleman909]

03:53 AM on 01/25/2011

Back in the 90's, Borders was one of my favorite places to hang out. They had musicians play there every weekend, and the place would be packed. You couldn't find a place to sit, so you'd have to stand there with a book in your hands and listen. It was strange to see what the crowd liked and disliked. One guy played a George Harrison tune, complete with vocal harmonies. You could tell there was a DAT machine hiding down there someplace. I loved it. Everyone else in the store looked annoyed. One kid came from Madison, wearing a teal beret and he played some futuristic folk music with odd jazz extensions. Another guy wrote songs about the Cretaceous period and said he played with Prince in '87. Some of the musicians were classically trained, and quite fantastic. But then, all of the sudden the music stopped. I went over to the cafe, and leaned with both elbows on the counter and asked, "why don't you have anymore live music during the weekends?" An impish dark-haired woman with a burgundy sweater spraying whipped cream on someone's caramel latte answered, "we do have live music, we just don't pay them anymore....but if they want to play for free, they can play."

[mricle]

08:52 PM on 03/02/2011

I wonder at what level of management these decisions were made? I have some friends who play in parks and subway stations for the pleasure of it (and a hat for donations). I doubt that any retail establishment would allow a donations hat, right? There will still be a few Borders left, so if U've read this comment so far, go out and buy a real paper book to read as well. ***mricle***

[SeattlePepe]

12:50 AM on 01/25/2011

Well, maybe, just maybe they are no longer great? Let me guess what could save them - a bigger union presence? More government hand outs? How about, if the business models don't work, let them go.

Until we get a manufacturing capability back in the US, we'll never restore our job losses. Say what you will, that's the void that's gone. Not enough service needs to restore 15,000,000 jobs.

[Nathan Rarere]

10:27 PM on 01/24/2011

Please help me save Wendy's. I'm trying but I can't do it all by myself

[Johnson Schwanz]

09:54 PM on 01/24/2011

In my opinion, Sprint's case is the most surprising. Sprint's wireless network is among the most reliable in the country, it was first to market with 4G WiMAX, and it has the most cost-effective calling and data plans among the major carriers. Nevertheless, Sprint could never shake the negative publicity and reputation from their customer service issues of a few years ago. They've done everything "right," but they just can't get over the hump that is the iPhone.

Maybe Sprint needs a bailout? Worked for Big Auto.

[RJII]

08:42 PM on 01/24/2011

#8 double baconator meal (large sized) is a ticket to heaven one way or another. Yummy.

[Adam Huzzey]

07:07 PM on 01/24/2011

I worked at a Borders all through high school, great memories. There was more knowledge packed on the shelves of that store then ever graced the halls of my high school :)

[Not-drinking-their-wine]

07:06 PM on 01/24/2011

Al that will be left in 2 years will be Wal-Mart and McDonalds. When That happens Wal-Mart will charge 3 times the prices they do now and being the 1 of only 2 employers they will get Congress which will be controlled by the Tea Party and president Palin will eliminate the Minimum wage and they will pay everyone 5 cents an hour

[Carissa Weibley]

06:42 PM on 01/24/2011

If Borders goes out of business, hopefully some of the independent bookstores can return!

[JDJones72]

06:57 PM on 01/24/2011

Seems kind of unlikely in this current climate for two reasons IMO:

Usually where you find a Borders you have another big box book retailer close by.

The technology seems to favor the big boxes as well. There's not network for e-books for small retailers that I am aware of.