Ten Brands That Will Disappear in 2012

Other 2010 nominees — including Blockbuster — bit the dust, during companies just as Dollar Thrifty are on the road to oblivion. Last September, after all things considered giving in to competition from Netflix and buckling in accordance with nearly $1 billion in debt, Blockbuster filed for Chapter 11 bankruptcy protection. In April of this year, Dish Network acquired the company for $320 million. Car rental chain Dollar Thrifty is after all entertaining buyout offers from Avis and Hertz. On June 6, the embattled company suggested that its shareholders not accept Hertz's recent offer, valued at $2.24 billion, or $72 a share. In the meantime, on June 13th, Avis Budget announced that "it had made progress in its discussion with the Federal Trade Commission regarding its potential acquisition" of the company. Even though Dollar Thrifty can remain choosy, a sale is a matter of when, not if.

Sony has a studio production arm which has nothing to do with its core businesses of consumer electronics and gaming. Sony bought what was Columbia Tri-Star Picture in 1989 for $3.4 billion. This entertainment operation has done poorly recently. Sony's fiscal year ends in March, and for the period, revenue for the group dropped 15% to $7.2 billion and operating income fell by 10% to $466 million. Sony is in trouble. It lost $3.1 billion in its latest fiscal year on revenue of $86.5 billion. Sony's gaming system group is in accordance with siege by Microsoft and Nintendo. Its consumer electronics group faces an overwhelming challenge from Apple. The company's future prospects have been furthermore damaged by the Japan earthquake and the hack of its large PlayStation Network. CEO Howard Stringer is in accordance with pressure to do something to increase the value of Sony's shares. The only valuable asset with which he can easily part is Columbia which would attract interest from a number of large media operations. Sony Entertainment will disappear with the sale of its assets.

A&W Restaurants is owned by fast food holding company giant Yum! Brands which has had the firm for sale since January. There have been no buyers. The chain was founded in 1919. The size of the company grew rapidly, and right away after WWII 450 franchises were opened. The firm pioneered the "drive in" fast food format. A&W began to sell canned versions of its sodas in 1971 — the part of the business that will survive as a container beverage business which is now owned by Dr. Pepper/Snapple. The A&W Restaurant business is too small to be viable now. It had 322 outlets in the U.S and 317 outside the U.S at the end of last year. All were operated by franchisees. By contrast, Yum!'s flagship KFC had 5,055 stores in the U.S. and 11,798 overseas. Two massive global fast food chains are even larger. Subway has 35,000 locations worldwide, and McDonald's has near as many. A&W does not have the ability to market itself against these chains and meanwhile a dozen other fast food operators like Burger King. And, A&W does not have the size to efficiently handle food purchases, logistics, and transportation costs compared to competitors many times as large.

The once-hip retailer reached the brink of bankruptcy previously this year, and there is no indication that it has gained anything more than a little time with its latest financing. It currently trades as a penny stock. The company had three stores and $82 million in revenue in 2003. Those numbers reached 260 stores and $545 million in 2008. For the first quarter of this year, the retailer had net sales for the quarter of $116.1 million, a 4.7% decline over sales of $121.8 million in the same period a year ago. Comparable store sales declined 8% on a constant currency basis. American Apparel posted a net loss for the period of $21 million. Comparable store sales have flattened, which means the firm likely will continue to post losses. American Apparel is also nearly certainly pursuant to this agreement gross margin pressure because of the rise in cotton prices. The retailer raised $14.9 million in April by selling shares at a discount of 43% to a group of private investors led by Canadian financier Michael Serruya and Delavaco Capital. According to Reuters, the 15.8 million shares sold represented 20.3 percent of the company's outstanding stock on March 31. That sum is not near enough to keep American Apparel from going the way of Borders. It is a small, pursuant to this agreement-funded player in a market with very large competitors with healthy balance sheets. It does not help matters that the company's founder and CEO, Dov Charney, has been a defendant in several lawsuits filed by former employees alleging sexual harassment.

The parent of Sears

The parent of Sears and Kmart — Sears Holdings — is in a lot of trouble. Total revenue dropped $341 million to $9.7 billion for the quarter which closed April 30, 2011. The company had a net loss of $170 million. Sears Holdings was created by a merger of the parents of the two chains on March 24, 2005. The operation has been a disaster ever since. The company has tried to run 4,000 stores which operate across the US and Canada. Neither Sears nor Kmart have done then recently, nevertheless Sears' domestic locations same store numbers were off 5.2% in the first quarter and Kmart's were down 1.6%. Last year domestic comparable store sales declined 1.6% in the total, with an increase at Kmart of .7% and a decline at Sears Domestic of 3.6%. New CEO Lou D'Ambrosio recently said of the last quarter that, "we as well fell short on executing with excellence. We cannot control the weather or economy or government spending. Yet we can control how we execute and leverage the potent set of assets we have." D'Ambrosio needs to pull a rabbit out of his hat shortly. Sharex are down 55% while the last five years. D'Ambrosio's only reasonable solution to the firm's financial problems is to stop supporting two brands which compete with one another and larger rivals just as Walmart and Target. The cost to market two brands and maintain stores which overlap one another geographically must be in the hundreds of millions of dollars each year. Employee and supply chain costs are as well gigantic. The path D'Ambrosio is likely to take is to consolidate two brand into one — keeping the better performing Kmart and shuttering Sears.

Sony Ericsson was formed by the two large consumer electronics companies to market the handset offerings each had handled separately. The venture started in 2001, previously the rise of the smartphone. Early in its history, it was one of the biggest handset manufacturers along with Nokia, Samsung, LG, and Motorola. Sales of Sony Ericsson phones were originally helped by the popularity of other Sony portable devices like the Walkman. Sony Ericsson's product development lagged behind those of companies like Apple and Innovation In Motion which dominated the high end smartphone industry early. Sony Ericsson as well relied on the Symbian operating system which was championed by market leader Nokia, nevertheless which it has abandoned in favor of Microsoft's Windows mobile operating system because of license costs and difficulty with programmers. In a period when smartphone sales worldwide are rising in the double digits and sales of the iPhone double year over year, Sony Ericsson's unit sales dropped from 97 million in 2008 to 43 million last year. New competitors like HTC now outsell Sony Ericsson by widening numbers. Sony Ericsson management expects several more quarters of falling sales and the company has laid off thousands of people. There have been rumors, backed by logic, that Sony will take over the operation, rebrand the handsets with its name, and market them in tandem with its PS3 consoles and VAIO PCs.

The cereal business is not what is used to be

The cereal business is not what is used to be, until further notice for products that are not considered "healthy." Among those is Kellogg's Corn Pops ready-to-eat cereal. Sales of the brand dropped 18% over the year that ended in April, down to $74 million. That puts it so then behind brands like Cheerios and Frosted Flakes, each which have sales of over $200 million a year. Private label sales have as well hurt sales of branded cereals. Earnings in this category were $637 million over the same April-end period. There is as well profit margin pressure on Corn Pops because of the sharp increase in corn prices. Kellogg's describes the product as being "crispy, glazed, crunchy, sweet." Corn Pops as well contain mono- and diglycerides, used to bind saturated fat, and BHT for freshness, which is also used in embalming fluid. None of these are likely to be what mothers want to serve their children in an age in which a healthy breakfast is more likely to be egg whites and a bowl of fresh fruit.

The magazine's future has been ruined by two trends. The first is the number of cancellations of soap operas. Long-lived shows which include "All My Children" and "One Life to Live" have been canceled and replaced by talk shows, which are less expensive to air. The other insurmountable challenge is the wide availability of details on soap operas online. Some of the shows even have their own fan sites. News about the industry, that is, is now distributed and no longer in one place. Soap Opera Digest's first quarter advertising pages fell 21% in the first quarter and revenue was down 18% to $4 million. In 2000, the magazine's circulation was in excess of 1.1 million readers. By 2005 it fell below 500,000 where it has remained for the last 5 years. Source Interlink Media, the magazine's parent, which as well owns automotive, truck, and motorcycle publications, has little reason to support a product based on a dying industry.

Nokia is dead. Shareholders are just waiting for an undertaker. The world's largest handset company has one asset. Nokia sold 25% of the global total of 428 million units sold in the first quarter. Its problem is that in the industry the company is viewed as a falling knife. Its market share in the same quarter of 2010 was near 31%. The arguments that Nokia will not stay independent are numerous. It has a very modest presence in the rapidly growing smartphone industry which is dominated by Apple, Innovation In Motion's Blackberry, HTC, and Samsung. Nokia runs the outdated Symbian operating system and is in the process of changing to Microsoft's Windows mobile OS, which has a tiny share of the market.

Nokia would be an attractive takeover target to a large extent because the cost to "buy" 25% of the global handset market would only be $22 billion based on Nokia's current market cap. Evidently, a buyer would need to pay a premium, nevertheless even $30 billion is within reach of several companies. Potential buyers would start with HTC, the fourth largest smartphone maker in the world. Its sales have doubled in both the last quarter and the last year. HTC will sell as many as 80 million handsets in 2011. The Taiwan-based company's challenge would be whether it could finance such a large deal. The other three likely bidders do not have that problem. Microsoft, which is Nokia's primary software partner, could easily buy the company and is often mentioned as a suitor. The world's largest software company recently moved furthermore into the telecom industry although its purchase of VoIP (Voice over Internet Protocol) giant Skype, which has 170 million active clients. Two other large firms have many reasons to buy Nokia. Samsung, part of one of the largest conglomerates in Korea, has openly set a goal to be the No.1 handset company in the world by 2014. The parent company is the largest in South Korea with revenue in 2010 of $134 billion. A buyout of Nokia would launch Samsung into the position as the world's handset leader. LG Electronics, the 7th largest company in South Korea, with sales of $48 billion, is by most measures the third largest smartphone company. It has the scale and balance sheet to takeover Nokia. The only question about the Finland-based company is whether a buyer would maintain the Microsoft relationship or change to the popular Android OS to power Nokia phones.