Vanishing Companies

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The economy might be on the rise; but some companies are still on their way down.

Each year the editors at 24/7 Wall Street identify the American brands most likely to disappear within the next year. The website bases its predictions on a series of seven criteria. This includes a rapid decline in sales, companies that are sold or go into bankruptcy and companies that have lost most of their customers. Every company on their list have fallen victim to one or more of the seven deadly factors. And the current list includes an airline, a television network and some well-known retailers.

For example Al Gore’s Current TV has been trying to gain a foothold in the market since its 2005 debut. Its latest attempt included hiring personality Keith Olbermann. Unfortunately reported tension over the host’s perks led to that partnership dissolving in March. Now Current is banking on “The Views” Joy Behar to bring in some much needed viewers.

For more companies on the verge of vanishing keep reading. These days it seems nothing lasts forever, especially in the dog eat dog world of capitalism.

Pacific Sunwear of California
Pacific Sunwear of California was started in a surf shop in Newport Beach, Calif., in 1980 and built its reputation offering "California-style" accessories, primarily sunglasses, shoes and swimwear.
GMI Ratings, a highly regarded corporate-balance-sheet- and earnings-research firm, recently put Pacific Sunwear on its list of companies at risk of going bankrupt.

That should come as no surprise. Five years ago, the company's stock traded for $23. It has traded as low as $1.11 this year, though it is now back above $2. And it continues to lose money.

Why is the company in so much trouble? It is too small and is in a commoditized business. Nearly every major department store chain sells products similar to what Pacific Sunwear offers, and so do many niche retailers.

From 24/7 Wall Street

Pacific Sunwear could be bought by a larger company, or it could sell its inventory to other retailers as it ceases to exist as an independent company.

Research In Motion
Research In Motion once dominated the smartphone market. Its BlackBerry products were a mainstay of businesses, but the Canadian company was late to the consumer market, where it has been pounded relentlessly by Apple and smartphones from a variety of manufacturers all running the Android operating system from Google.

The pace at which Research In Motion fell apart was even more extraordinary than its rise. Research group NPD reported that RIM's U.S. market share was 44% in 2009 but only 10% last year, and it's still shrinking.

In the past year, the company has warned twice that it would miss its earnings forecast. It has also replaced its longtime chief executive and disclosed plans to lay off thousands of employees.
RIM's board said it was reviewing "strategic options," that include putting the company up for sale.

Current TV
Al Gore's Current TV was on life support even before it fired its only bankable star, Keith Olbermann, in March following battles over the host's perks.

Olbermann was replaced by former New York Gov. Eliot Spitzer, whose ratings in April had declined nearly 70% from Olbermann's March figures, according to TV audience measurement firm Nielsen. At the time, The Hollywood Reporter said, "Replacement Eliot Spitzer pulled an anemic 47,000 total viewers in the first outing of Viewpoint, with just 10,000 among adults 25-54. The weeks since saw an early rebound, particularly in the demo, but in its four weeks on air Viewpoint has steadily declined in both respects."

Reuters recently reported that Current TV's audience had fallen enough that cable giant Time Warner Cable may have the right to discontinue carrying the channel.

The closest Current TV has to a star is talk show veteran Joy Behar, a former cast member of "The View," who had her show canceled by CNN's HLN in November.

Talbots
Women's apparel and accessories retailer Talbots has to be near the top of the list of retailers battered by the recession. The company's woes were compounded by its failure to deliver distinctive products that appeal to consumers.

The Hingham, Mass., company is supposed to be taken private by Sycamore Partners, but a $190 million deal has been delayed. It is a wonder that Sycamore wants to buy the retailer. Even if the deal closes, Sycamore may find there is no way to make the company viable again.

When it last announced earnings, Talbots said it planned to close 110 stores. The company also said it would try to find a new CEO.

With the exception of a tiny profit last year, the retailer has lost money every year in the past five. Talbots made only $1 million in the most recent quarter, on $275 million in revenue. In announcing the results, management acknowledged that Talbots could be in default under its debt facilities if financial conditions continue to deteriorate.

American Airlines
AMR, the parent of American Airlines, filed for Chapter 11 bankruptcy in November. The carrier still operates largely as it did prior to the filing, but with some of the advantages of bankruptcy protection. Labor costs will be cut, along with debt service and lease obligations for airplanes.

AMR says it plans to emerge from Chapter 11 as a viable airline. But US Airways Group has made it clear that it wants to buy American's assets. As soon as the rumors of a potential buyout started, some of American's largest unions said they backed such a plan as a way to protect jobs.

With US Airways probably willing to give AMR's creditors a good deal to get American's assets, the potential deal received tremendous support from bondholders and analysts. US Airways has much to gain from this transaction, as its position in the carrier market has been eroded by the mergers of Northwest and Delta and the combination of United and Continental.