I was talking to a young acquaintance of mine a few days ago. This guy is one of those kids who always has his nose in front of a computer, headphones firmly affixed on his head, playing Worlds of Warcraft, Tron or whatever the heck the latest computer game is.
Anyway, I ended up having a debate with this youngster about corporate life. He insists that companies like Facebook and Google, for example, will never go out of business. He says they are too big, too powerful, and too wealthy.
I tried to explain to him that when I was young there were companies that we thought would last forever. But, as we now know, forever can happen tomorrow. The rules have changed, corporate activity is greatly accelerated. Remember Bear Stearns? Bear was trading at $172 a share as late as January 2007, and $93 a share back in February 2008. On March 16, of that same year, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. That figure is less than 7 percent of Bear Stearns’ market value just two days before.
If that doesn’t illustrate the speed of business, I don’t know what does.
With that in mind and as a little history lesson to my young acquaintance, I thought I’d take a walk down memory lane through the wreckage of some once mighty companies that have fallen on hard times.
Montgomery Ward- – this place holds a special place in my heart. As a kid I made a lot of visits to this place with my mom. Man, I loved their donuts. A former American department store chain, founded as the world’s #1 mail order business in 1872 by Aaron Montgomery Ward, and which went out of business in 2001. At its height, it was one of the largest retailers in the United States.
Wang Laboratories was a computer company founded in 1951 by Dr. An Wang and Dr. G. Y. Chu. At its peak in the 1980s, Wang Laboratories had annual revenues of $3 billion and employed over 33,000 people. Wang Laboratories filed for bankruptcy protection in August 1992. After emerging from bankruptcy, the company eventually changed its name to Wang Global. In 1999, Wang Global was acquired by Getronics of The Netherlands.
Trans World Airlines (TWA) was one of the largest United States commercial airlines from 1930 until its merger with American Airlines in 2001. Flying to most major U.S. cities, TWA was one of the largest domestic airlines; before deregulation it and American, United and Eastern were known as the Big Four.
Adelphia Communications Corporation was a cable television company headquartered in Pennsylvania. Adelphia was the fifth largest cable company in the United States before filing for bankruptcy in 2002 as a result of internal corruption. Adelphia was founded in 1952 by John Rigas in the town of Coudersport. The majority of Adelphia’s assets were acquired by Time Warner Cable and Comcast in 2006. As a result of this acquisition, Adelphia no longer exists as a cable provider.
Arthur Andersen LLP, was once one of the “Big Five” accounting firms along with PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations. In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm’s handling of the auditing of Enron(see below).
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 staff and was one of the world’s leading electricity, natural gas, communications, and pulp and paper companies. Fortune named Enron “America’s Most Innovative Company” for six consecutive years. At the end of 2001, it was revealed that its reported financial success was sustained in large part by systematic, and creatively planned accounting fraud, known as the “Enron scandal“. Enron has since become a popular symbol of corporate fraud and corruption. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm (see above).
Long Distance Discount Services, Inc. (LDDS) began in Hattiesburg, Mississippi in 1983. In 1985 LDDS selected Bernard Ebbers to be its CEO. The company name was changed to LDDS WorldCom in 1995, and later just WorldCom. By 2000, the telecommunications industry had entered a downturn. In 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time (since overtaken by the collapse of Lehman Brothers and Washington Mutual in September 2008).
On April 14, 2003, WorldCom changed its name to MCI and moved its corporate headquarters from Clinton, Mississippi, to Dulles, Virginia.
Circuit City Stores, Inc. was an american retailer in brand-name consumer electronics, personal computers, entertainment software, and (until 2000) large appliances. The company opened its first store in 1949 and pioneered the electronics superstore format in the 1970s.
Circuit City liquidated its final American retail stores in 2009 following a bankruptcy filing and subsequent failure to find a buyer.
Good Guys was a chain of consumer electronics retail stores with 71 stores in California, Nevada, Oregon, and Washington. Good Guys was founded in 1973 by Ron Unkefer on Chestnut Street, San Francisco. By 2006, all of this company’s stores had closed. Computers, televisions, VCRs, and DVD players, stereos, etc. This company holds a special place in my heart as I worked there for about a year. A long…long…time ago.
Washington Mutual, Inc. abbreviated to WaMu, was the United States‘ largest savings and loan association until its collapse in 2008. (Who can forget those ubiquitous commercials that played on television during the early 2000’s?)
Washington Mutual Bank’s closure and receivership is the largest bank failure in American financial history. Before then, it was the sixth-largest bank in the United States. As of June 30, 2008, Washington Mutual Bank had total assets of US$ 307 billion, with 2,239 retail branch offices operating in 15 states, with 4,932 ATMs, and 43,198 employees.
The Sharper Image The Sharper Image Corporation was the brainchild of Richard Thalheimer. The company started as a catalog business to sell jogging watches. He started advertising in running magazines, and within 2 years he had made his first million.
Mervyns was an American department store chain based in Hayward, California. It carried national brands of clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares. Many of the company’s stores were found in shopping malls.
In December 2006, Mervyns had 189 stores in 10 states. In July 2008, Mervyns announced it filed for Chapter 11 bankruptcy protection. Three months later (October 17, 2008), the company announced that it would liquidate its assets through a Chapter 7 filing.
What are some companies that you thought you would never see go out of business?