Calling on the death of a company is no fun task. Some companies cannot get it right and it is amazing how some companies can hold on to a status as a public company. 24/7 Wall St. has compiled a list of ten stocks which may disappear in 2012. Some will likely avoid the hangman, while others seem doomed.
The list includes the following still-public stocks: Alimera Sciences, Inc. (NASDAQ: ALIM); AMR Corporation (NYSE: AMR); American Apparel, Inc. (AMEX: APP); Eastman Kodak Co. (NYSE: EK); Energy Conversion Devices, Inc. (NASDAQ: ENER); FriendFinder Networks, Inc. (NASDAQ: FFN); Nortel Networks Corp. (NRTLQ); Pinnacle Airlines Corp. (NASDAQ: PNCL); Reddy Ice Holdings, Inc. (RDDY); YRC Worldwide Inc. (NASDAQ: YRCWD).
Almost all of these have either had a form of bankruptcy or reorganization, while others have been in the rumor mill for quite some time. We included a write-up on each, and have even have gone as far as discussing some caveats which could help some of these stocks to survive. There is even a chance that a couple of these could end up being major turnaround stocks.
Alimera Sciences, Inc. (NASDAQ: ALIM) saw a share price implosion take place in November after the FDA all but rejected its eye drug. We covered this one at BioHealthInvestor with a near 75% drop on the news after being public less than two years. Shares fell to $1.96 with a $61 million market cap and shares are now at $1.30 with a $41 million market cap. The good news is that it has no debt overhang and it may be able to scrap operating costs down to nothing. Still, we cannot see how it can fund itself through another set of trials. Mathematically it is more than financially challenged, even if the company manages to hang on as a NASDAQ listing.
AMR Corporation (NYSE: AMR) is effectively done already. We had been expecting an NYSE delisting notice to come for a while, even though there was a time even in the last week of the year where shares gapped up big and traded as though there may be some intrinsic post-bankruptcy value left for common shareholders. That would not be the normal post-bankruptcy value. While anything is possible, this one will move to the pink sheets and will trade around with a 5-ticker symbol for a while.
American Apparel, Inc. (AMEX: APP) has so far managed to avoid being delisted and so far managed to avoid a bankruptcy through a shaky history. Still, things have been sketchy here for so long that even a near-40% jump in shares from $0.57 to $0.75 since its early December business update showed improving store sales metrics. This company has managed to survive on less than $10 million in cash but still has a net tangible value of $56 million despite a loss in 2010 of $86 million. Here is the caveat” American Apparel has managed to exist in this diminished state for some time and its controversial CEO has managed to hang on. Maybe the company can pull a rabbit out of a hat and turnaround. American Apparel often notes “going concern” as a risk under its safe harbor statements in press releases.
Eastman Kodak Co. (NYSE: EK) has done everything wrong and had everything go wrong that could go wrong. Antonio Perez has been on our list of CEOs that need to be fired for years now and the company has stuck its head in the sand for far too long. The bankruptcy rumors have swirled for long enough. The real value left in the company is in the patents, but the company has not been able to make its patent machine turn into a survival machine. The KKR board members have also resigned and that could be a sign that the private equity firm will try to force a move here so it can secure whatever value is left. At the end of September when we polled our readers, the poll response was that Kodak was more likely to go bankrupt than Greece. Ouch.