Try BlazeTV for Free
News

These Are the 10 Brands That Could Disappear in 2012

Nokia, Sears, and a popular cereal made the list.

Each year, researchers at 24/7 Wall St. compile a list of brands that are going to disappear in the near-term.  Last year’s list proved prescient in many instances, predicting what should have been the demise of T-Mobile (were it not for the intervention of forces outside the market). Other 2010 nominees–including Blockbuster–bit the dust, while companies, such as Dollar Thrifty are on the road to oblivion.

However, the 2010 list of brands that may disappear was not perfect. They missed the mark on a few companies. Notably, Kia, Moody’s, BP, and Zales appear to be doing better than expected.

Nevertheless, brands that have stood the test of time for decades are falling by the wayside at an alarming rate. For instance, Pontiac–a major car brand since 1926–is gone, shut down by a failing GM. Blockbuster, as mentioned in the above, is in the process of dismantling, after it once controlled the VHS and DVD markets. House & Garden folded after 106 years. It succumbed to the advertising downturn, a lot of competition, and the cost of paper and postage. Its demise echoed the 1972 shutdown of what is probably the most famous magazine in history–Life. That was a long time ago, but it serves to demonstrate that no brand is too big to fail if competition, new inventions, costs, or poor management overwhelms it.

This year’s list of the 10 brands that will disappear takes a methodical approach in deciding which brands will fail. The major criteria were as follows:

  • A rapid fall-off in sales and steep losses
  • Disclosures by the parent of the brand that it might go out of business
  • Rapidly rising costs that are extremely unlikely to be recouped through higher prices
  • Companies which are sold
  • Companies that go into bankruptcy
  • Firms that have lost the great majority of their customers
  • Operations with rapidly withering market share

Each of the ten brands on the list suffers from one or more of these problems. Each of the ten will be gone, based on the aforementioned definitions, within 18 months.

10. Nokia

Nokia is dead. Shareholders are just waiting for an undertaker. The world’s largest handset company has one asset: Nokia sold 25 percent of the global 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 nearly 31 percent. 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, Research In Motion’s Blackberry, HTC, and Samsung. Nokia runs the outdated Symbian operating system and is in the process of changing to Microsoft Window mobile OS, which has a tiny share of the market. Nokia would be an attractive takeover target largely because the cost to “buy” 25 percent of the global handset market would only be $22 billion based on Nokia’s current market cap.

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 further into the telecom industry though its purchase of VoIP giant Skype, which has 170 million active customers. Two other large firms have many reasons to buy Nokia. Samsung, part of one of the largest conglomerates in Korea, has publicly set a goal to be the No.1 handset company in the world by 2014.

9. Soap Opera Digest

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 show, 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, in other words, is now distributed and not longer in one place.

Soap Opera Digest’s first quarter advertising pages fell 21 percent in the first quarter and revenue was down 18 percent 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 also owns automotive, truck, and motorcycle publications, has little reason to support a product based on a dying industry.

8. MySpace

MySpace, once the world’s largest social network, died a long time ago. It will be buried soon. News Corp bought MySpace and its parent in 2005 for $580 million, which was considered inexpensive at the time based on the web property’s size. MySpace held the top spot among social networks based on visitors from mid-2006 until mid-2008 according to several online research services.

Then Facebook came along.

Facebook has 700 million members worldwide now and recently passed Yahoo! as the largest website for display advertising based on revenue. News Corp was able to get an exclusive advertising deal worth $900 million shortly after it bought the property, but that was its sales high-water mark. Its audience is estimated to be less than 20 million visitors in the U.S.

News Corp announced in February that it would sell MySpace. There were no serious bids.

Rumors surfaced recently that a buyer may take the website for $100 million. The brand is worth little if anything. A buyer is likely to kill the name and fold the subscriber base into another brand. News Corp has hinted it will close MySpace if it does not find a buyer.

7. Kellogg’s Corn Pops

The cereal business is not what is used to be, at least for products that are not considered “healthy.” Among those is Kellogg’s Corn Pops ready-to-eat cereal. Sales of the brand dropped 18 percent over the year that ended in April, down to $74 million. That puts it well behind brands like Cheerios and Frosted Flakes, each which have sales of over $200 million a year. Private label sales have also hurt sales of branded cereals. Revenues in this category were $637 million over the same April-end period. There is also 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 also 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.

6. Sony Ericsson

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, before 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 Research In Motion which dominated the high end smartphone industry early. Sony Ericsson also relied on the Symbian operating system which was championed by market leader Nokia, but which it has abandoned in favor of Microsoft’s Windows mobile operating 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.

5. 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 across the U.S. and Canada. Neither Sears nor Kmart have done well recently, but Sears’ domestic locations same store numbers were off 5.2 percent in the first quarter and Kmart’s were down 1.6 percent. Last year domestic comparable store sales declined 1.6 percent in the total, with an increase at Kmart of .7 percent and a decline at Sears Domestic of 3.6 percent.

New CEO Lou D’Ambrosio recently said of the last quarter that, “we also fell short on executing with excellence. We cannot control the weather, economy, or government spending. But we can control how we execute and leverage the potent set of assets we have.”

Shares are down 55 percent during the last five years. D’Ambrosio only reasonable solution to the firm’s financial problems is to stop supporting two brands which compete with one another and larger rivals such as Walmart and Target. The cost to market two brands and maintain stores that overlap one another geographically must be in the hundreds of millions of dollars each year.

Employee and supply chain costs are also gigantic. The path D’Ambrosio is likely to take is to consolidate two brands into one–keeping the better performing Kmart and shuttering Sears.

4. American Apparel

The once-"hip" retailer reached the brink of bankruptcy earlier 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 percent decline over sales of $121.8 million in the same period a year ago. Comparable store sales declined 8 percent 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 almost certainly under 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 percent 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 nearly enough to keep American Apparel from going the way of Borders. It is a small, under-funded player in a market with very large competitors with healthy balance sheets. It does not help that the company’s founder and CEO, Dov Charney, has been a defendant in several lawsuits filed by former employees alleging sexual harassment.

See the rest of the list here.

(Douglas A. McIntyre/Becket Adams—24/7 Wall St./The Blaze)

[Editor's note: This story was originally released in June of 2011. Since then, very little has changed for the companies on this list. Thus far, the predictions have proven accurate and relevant.]

One last thing…
Watch TheBlaze live and on demand on any device, anywhere, anytime.
try premium
Exclusive video
All Videos
Watch BlazeTV on your favorite device, anytime, anywhere.
Try BlazeTV for Free
Recommended
Daily News Highlights

Get the news that matters most delivered directly to your inbox.