Read America’s Ten Shrinking Corporate Giants

Large companies can lose a significant amount of their revenues because they get into a great deal of financial trouble. A company may lose part of its customer base quickly because of economic forces, or it may be part of a financial catastrophe. As a result, the company’s revenue declines, and it begins to post large losses. In cases like these, companies often are forced to sell divisions to fund their survival. Alternatively, companies may close some of their operations that drain capital. General Motors and Citigroup are good examples of this category. Each moved from relative prosperity to difficulty in a very short period.

The other reason large companies shrink quickly is by design. The management of a corporation created by merger or acquisition activity may find that some of its pieces no longer fit together. One division may grow at a much higher or slower rate compared to others. Also, the way the stock market values one part of a large corporation may change because it is in a category Wall Street no longer favors. That, in turn, becomes a burden on the stock price of the entire enterprise. Telecom hardware company Motorola Solutions and media giant Time Warner fall into this category. Each is smaller than it was five years ago because it spun out a major business.

24/7 Wall St. used Capital IQ to screen the largest companies in America based on total revenue in 2006. We then screened for those that had the largest drops in total revenue between 2006 and 2010. Most of the eight companies on this list lost a third of their total revenue over the period, and some lost more than half. The list is ranked by total revenue loss from greatest to least.

This is 24/7 Wall St.’s list of America’s Shrinking Corporate Giants

Shares of Amazon are down more than -9% in just before noon today on a weak quarterly earnings report last night. Nearly 13 million shares have been traded so far today, compared with a 3-month daily average of about 6 million shares traded. We have more coverage here.

A big winner this morning has been Whirlpool, which is up nearly 16% solid earnings and a strong outlook. More than 5.5 million shares have traded this morning, compared with a 3-month daily average of around 1.9 million.

AOL is up more than 14% following a quarterly earnings report that missed estimates, but showed a jump in ad sales. More than 3.2 million shares have traded this morning, compared with a 3-month daily average of about 1.4 million.

JDA Software is down nearly -18% on following a fairly week quarterly report and continuing investor wariness over an SEC investigation of the company’s accounting practices. Nearly 2.2 million shares have traded by mid-day, compared with a daily average of about 320,000.

Unisys shares are down nearly -11% on a weaker-than-expected quarterly report. More than 2.1 million shares have already traded this morning, compared with a 3-month daily average of about 720,000 shares.

Minutes before noon ET, the DJIA is up 1.09% at about 12,771, the Nasdaq is up 1.19% at around 2,847, and the S&P 500 is up 1.09% at about 1,327.

Paul Ausick

We have provided estimates from Thomson Reuters on each and offered commentary and guidance on some of these companies.  More detailed previews will be available Tuesday morning for the reports due after the closing bell:

Aetna Inc. (NYSE: AET) estimates are $0.98 EPS and $8.49 billion.  Watch the medical loss ratio here as it seems to be in quarters past that insurance outfits have been making more money than they were supposed to be making once the new healthcare laws go into effect.  With shares around $44, the year high is $46.01.

The Allstate Corporation (NYSE: ALL) will prove if it has everyone in good hands or not.  Thomson Reuters has estimates of $0.97 EPS.  With shares around $29, its 52-week range is $22.27 to $34.40.

AOL Inc. (NYSE: AOL) has now seen shares bounce 60% off of the bottom and that is despite the recent news that Facebook is taking much of the new advertising market share.  Estimates are $0.16 EPS per Thomson Reuters data but we just saw $0.28 noted in a Dow Jones preview yesterday.  That being said, we are staying out of this one.

BMC Software Inc. (NASDAQ: BMC) is expected to post $0.82 EPS on almost $556 million in sales.

Capstead Mortgage Corp. (NYSE: CMO) is not a market moving stock, but investors who are into the world of high-yielding mortgage REITs will be watching.  The estimate is $0.41 EPS (actually FFO) and the next dividend will be likely dependent upon that report.  Its dividend yield screens north of 13% today.

Chipotle Mexican Grill Inc. (NYSE: CMG) is a cult stock if there every was one and now its valuation is close to $11.5 billion and the stock is within 2% of its all-time high. Thomson Reuters has a consensus of $1.83 EPS and $591.1 million in sales.  For 2012, the estimates are $8.68 EPS and 2.7 billion in revenues.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is another huge cult stock down on its luck from recent highs.  The stock is still down by more than half.  Thomson Reuters has estimate at $0.36 EPS and $1.06 billion in sales.

JDS Uniphase Corporation (NASDAQ: JDSU) still has a huge shareholder base that got buried in the first big tech bubble.  At $12.75, the 52-week range is $8.59 to $29.12.  Thomson Reuters has a consensus of $0.10 EPS and $390.9 million.

Las Vegas Sands Corporation (NYSE: LVS) is also within striking distance of a near-term high as shares are currently around $49.00 against a 52-week range of $36.05 to $50.68.  The consensus estimates from Thomson Reuters are $0.57 EPS and $2.46 billion in sales. 

NASDAQ OMX Group Inc. (NASDAQ: NDAQ) is a value stock when it comes to the exchanges and it is not supposedly trying to do any crazy merger right now.  At $25.00 the 52-week range is $20.32 to $29.71.  The consensus estimate is $0.62 EPS and $417.8 million. 

QUALCOMM Inc. (NASDAQ: QCOM)is within striking distance of its yearly high as shares are around $58.80 and the 52-week range is $45.98 to $59.84.  Thomson Reuters has estimates of $0.90 EPS on $4.57 billion in revenues. Next quarter estimates are $0.89 EPS and $4.49 billion in sales.  Keep in mind that if it rallies much more than the current $98.8 billion market cap will be $100 billion.

Your email address

subscribe

terms and conditions

EU leaders probably will create a 20 billion euro fund to help improve unemployment among the young. (Reuters)

Intuit (NASDAQ: INTU) reports that small business hiring slowed in January and wages dropped. (Reuters)

The head of Philips warns of challenges in the first half of this year. (Reuters)

Republicans will link a highway spending bill to the Keystone XL pipeline. (Reuters)

Much of the missing $1.2 billion from MF Global may never be found. (WSJ)

Citigroup’s (NYSE: C) Richard Parsons may retire as chairman. (WSJ)

Germany warns Greece it may not get bailout funds because of inadequate austerity measures. (WSJ)

The head of the Royal Bank of Scotland (NYSE: RBS) will turn down his bonus because of an uproar about its size. (WSJ)

The IMF will review whether the yuan is still undervalued. (WSJ)

AMR’s nonunion retirees want more say in its Chapter 11. (WSJ)

The Association of Fundraising Professionals says many nonprofits had record years in 2011. (WSJ)

Sarkozy announces plans to improve France’s competitiveness. (WSJ)

Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), Aol (NYSE: AOL) and Yahoo! (NASDAQ: YHOO) set an alliance to prevent phishing emails. (WSJ)

Exxon Mobil (NYSE: XOM) will sell some of its Japanese operations. (WSJ)

A new Fed study warns of deflation. (WSJ)

Investors are voicing more concern over Japan’s debt. (WSJ)

Troubles at newspapers caused 71 dailies to be sold last year. (NYT)

Many U.S. banks use CDs to bet for or against Europe’s problems. (NYT)

Research In Motion (NYSE: RIMM), which has done well in Europe, faces more challenges there. (NYT)

Ratings agencies will be questioned about their role in MF Global. (FT)

Exports from industrial companies in the West to China fall. (FT)

Douglas A. McIntyre

Yahoo!’s revenue fell 13% to $1.324 billion in the fourth quarter. Net income dropped 5% to $296 million. Even with its new CEO, almost no one who watches the company thinks there is a solution to the ongoing shrinkage of sales.

Yahoo! will somehow add cash, perhaps over $10 billion, to its balance sheet through the sale or spinoff of Yahoo! Japan and its stake in Alibaba. The means by which it will handle those transactions are still an open question because of tax issues and the difficulties of negotiations with the two Asian companies. Neither of them has to make a transaction with Yahoo! now.

MSN and Aol already have huge online audiences. They have to find ways to increase sales from these visitors, but there is no proof that combining with Yahoo! will do that.

Companies that lack the scale that they need to augment their traditional media sales with larger online ones would find Yahoo! an important acquisition. It would allow them to marry their old world TV or print sales with a larger online audience. CBS had 79 million unique visitors in December, according to research firm Comscore. Viacom’s digital properties had about the same number. Comcast (NASDAQ: CMCSA) had 50 million and Gannett (NYSE: GCI) had 44 million. None of these figures comes close to Yahoo!’s 176 million.

The troubles of traditional media are well understood. Public firms like CBS and Gannett face the erosion of television and print ad sales. Right now, their digital sales are insufficient to make up for that attrition. The chance to go to advertisers with packages that combine old media marketing with new may be their only chance to keep revenue advances — and happy shareholders.

Yahoo! has a market cap of $19 billion. Much of that is based on the value of Alibaba and Yahoo! Japan. Yahoo!’s core business may be worth less than $10 billion. That makes it an affordable purchase or merger candidate for most large traditional media companies, which have larger market values than Yahoo!.

The argument against a the ownership of Yahoo! by a traditional media company is that the older company would have no better chance to increase the portal’s revenue than MSN would. That is not true. Large advertisers continue to look for ways to reach huge audiences, some of which consume most media through traditional channels and some of which spend much of their time online. Yahoo!, in combination with a traditional media company, would offer the world’s largest marketers a chance to gain both through one firm.

Douglas A. McIntyre

IKEA posts a profit and grows in most regions of the world. (Reuters)

Greece and private creditors move closer to a debt deal. (Reuters)

Apple (NASDAQ: AAPL) says it will enter the digital textbook business. (Reuters)

IBM (NYSE: IBM) results show solid IT demand. (Reuters)

Angry Birds’ parent pushes back the date of its IPO. (Reuters)

The EC will decide whether to approve a Google buyout of Motorola Mobility (NYSE: MMI) by February 13. (Reuters)

Eastman Kodak’s (NYSE: EK) move into bankruptcy as a means to cut costs may not yield high value for its patents as well. (WSJ)

Credit Suisse (NYSE: CS) buys old AIG (NYSE: AIG) mortgage paper from the New York Federal Reserve. (WSJ)

AT&T’s (NYSE: T) new plan to raise data costs for subscribers may prompt some to switch to competitors. (WSJ)

HSBC’s (NYSE: HBC) Chinese PMI estimate shows slow manufacturing, with a 48.8 measurement compared to 48.7 in December. (WSJ)

Floods in Thailand do not dent Intel’s (NASDAQ: INTC) earnings much. (WSJ)

American homeowners finally begin to improve their property, according to IHS Global Insight. (WSJ)

China sets more deals with U.S. allies to strengthen its supply of oil. (WSJ)

The European Aviation Safety Agency says Airbus will do more safety inspections of its A380 superjumbo. (WSJ)

General Motors (NYSE: GM) says it is the largest car company in the world, but experts disagree on how to count affiliate sales. (WSJ)

The Energy Information Administration says exports of natural gas could drive U.S. prices up by 54% in 2018. (WSJ)

Google presses its effort in display ads, which could pressure Aol (NYSE: AOL) and Yahoo! (NASDAQ: YHOO). (WSJ)

General Electric (NYSE: GE) tries to improve its prospects, but its size and diversity may hurt that push. (WSJ)

Hedge fund investors pull more cash from the firms than they add in the last part of 2011. (WSJ)

Commerzbank, Banca Monte dei Paschi di Siena, and Spain’s Bankia must push to raise cash to meet regulations. (WSJ)

American Express (NYSE: AXP) and Capital One (NYSE: COF) earnings show consumers returning to the use of credit. (WSJ)

Dealogic says that companies have raised $44.2 billion this year — a record for the period. (WSJ)

Chris Dodd, the head of the Motion Picture Association of America, suggests that tech and content companies meet to explore their differences. (NYT)

Ireland says its economy will be troubled again this year as its tries to meet austerity goals. (NYT)

Italy’s banks borrow 50 billion euros from the European Central Bank. (FT)

International Monetary Fund’s Largarde warns that budget cuts linked to austerity could damage growth. (Bloomberg)

Douglas A. McIntyre

Yahoo! (NASDAQ: YHOO) is working on a deal with Alibaba to sell part of its stake in the Chinese company. (Reuters)

Toyota (NYSE: TM) expects record sales next year of 8.48 million, up 20% from this year. (Reuters)

Bank of America (NYSE: BAC) will pay $335 million due to a lending bias charge against its Countrywide operation. (Reuters)

Fitch warns the U.S.’s AAA rating is under pressure because of debt load. (Reuters)

EU antitrust officials have not been convinced by arguments that the NYSE Euronext (NYSE: NYX) and Deutsche Boerse should merge. (Reuters)

A study by Exane BNP Paribas shows that only a few people in Europe would buy the new Nokia (NYSE: NOK) Lumia smartphone. (Reuters)

Airbus should deliver 1,600 planes this year, which would significantly push down the market share of Boeing (NYSE: BA). (Reuters)

Hundreds of eurozone lenders have tapped the European Central Bank for $640 billion in low interest loans, a sign of trouble in the financial sector there. (WSJ)

Former Avon (NYSE: AVP) CEOs James Preston and David Mitchell say they are upset that current CEO Andrea Jung will stay as executive chairman after she steps down as CEO. (WSJ)

American Express (NYSE: AXP) looks at businesses beyond credit cards. (WSJ)

Nevada may allow online poker within its borders. (WSJ)

U.S. Transportation Secretary Ray LaHood says he will not back a proposal to eliminate use of cellphones in cars. (WSJ)

Michigan will further look into Detroit’s finances as it considers a takeover of the city. (WSJ)

The Justice Department says Exelon (NYSE: EXC) and Constellation Energy (NYSE: CEG) could merge if they sell several plants. (WSJ)

Aol (NYSE: AOL) says criticism of management’s plans by Starboard Value is misplaced. (WSJ)

The head of TheStreet.com (NASDAQ: TST) to depart. (WSJ)

The National Association of Realtors says home sales were 14% below forecasts from 2007 to 2010. (NYT)

M&A activity drops because of sovereign debt and economic slowdowns. (FT)

Greece’s creditors resist IMF pressure to take more write-offs on sovereign paper. (Bloomberg)

Douglas A. McIntyre

Bank of Japan says it will hold to current policies as the economy in the Asian nation has weakened. (Reuters)

Amazon.com (NASDAQ: AMZN) considered buying Research In Motion (NASDAQ: RIMM). (Reuters)

Electronic Arts (NASDAQ: ERTS) puts a large investment into its new Star Wars: The Old Republic. (Reuters)

The Federal Reserve offers new rules to cut risk-taking by U.S. banks. (Reuters)

Oracle (NASDAQ: ORCL) misses estimates and shares fall 8%. (Reuters)

AT&T (NYSE: T) may buy Clearwire (NASDAQ: CLWR) or Dish Network (NASDAQ: DISH) now that its T-Mobile bid is over. (Reuters)

HTC begins to test new models after a patent suit loss to Apple (NASDAQ: AAPL). (Reuters)

Credit Suisse (NYSE: CS) buys HSBC’s (NYSE: HBC) Japan private bank. (Reuters)

Chinese hackers hit the U.S. Chamber of Commerce. (WSJ)

Some $200 million may have been transferred from MF Global accounts to JPMorgan Chase (NYSE: JPM). (WSJ)

Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT) considered a bid for RIM. (WSJ)

Wendy’s (NYSE: WEN) may pass Burger King in sales. (WSJ)

Honda (NYSE: HMC) to shift more production to the North America. (WSJ)

A lack of action by Congress could raise payroll taxes to 6.2% and eliminate long-term unemployment payments. (WSJ)

Fund Starboard Value attacks Aol (NYSE: AOL) for its ongoing plans to invest in content. (WSJ)

LightSquared pushes the FCC to approve its service, which some think interferes with GPS devices. (WSJ)

The Commodity Futures Trading Commission says firms must disclose data on trading over-the-counter securities. (WSJ)

Bill Gross’s Total Return Fund will have its first outflow since 1987. (WSJ)

Spain’s borrowing costs drop as it auctions new bonds. (WSJ)

EU banks probably will take advantage of new European Central Bank loans. (FT)

Troubled EU banks sell more mortgage securities. (FT)

French banks will try to raise $48 billion to satisfy debt needs. (Bloomberg)

Douglas A. McIntyre

Eurozone on notice. The situation in Europe, so promising just days ago, took a sharp turn for the worse. S&P put 17 nations in the euro area on credit watch and said it might even downgrade AAA-rated nations, including Germany and France. In theory, this might increase their borrowing costs. In fact, it probably will. Money from international capital markets investors has already begun to shift into safe haven U.S. Treasuries. The S&P action is yet another warning to EU leaders that economists see the sovereign situation deteriorating, as long as the European Central Bank and International Monetary Fund will not provide substantial aid to the weakest nations in the regions, and the eurozone itself will not quickly create a loan facility. News that Angela Merkel and French president Sarkozy want a treaty to force more fiscal discipline within the region hardly provides a road map for a rescue.

Deepwater Horizon fallout. The fighting among the companies involved in the Deepwater Horizon catastrophe has escalated a year-and-a-half after the rig’s explosion. BP (NYSE: BP) has accused oil services company Halliburton (NYSE: HAL) of suppressing data about its role in the incident. The charge is serious and eventually could lead to accusations of fraud. The firms responsible for the well, which also include Transocean (NYSE: RIG), still face tremendous liability. Thousands of individuals and business have staked claims for damages caused by the explosion and leak. The U.S. government and those of several states may bring actions of their own that could seek large penalties.

USPS cuts. The U.S. Postal System’s management continues to advocate greater cuts to save itself from billions of dollars in losses and the weight of its pension plans. Congress may not support these suggestions. There will be political fallout if hundreds of post offices are closed and tens of thousands of postal union members are fired. The most visible of the suggestions made by the Postmaster General is that first-class mail no longer be delivered in one to three business days. The window for delivery would be lengthened to two to five days. But the postmaster is not the captain of his own fate. His suggestions could fall on deaf ears in Congress.

Facebook ad revenue. Facebook sharply increased its market share of online advertising among portals from 2009 to 2010. The trend is more troubling for Facebook competitors, if the 2006 to 2010 period is used as a measurement. Facebook has 0.6% of global internet ad expenditures among portals in 2006. That number was 3.1% last year. The victims of Facebook’s success are primarily Aol (NYSE: AOL), Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO), each of which has had little if any improvement in ad revenue so far in 2011 compared to last year.

Shale gas growth. The shale gas industry should support more than 850,000 jobs by 2015 and contribute $118 billion to GDP. That is according to a new study from global research firm IHS. The news is unexpected. U.S. energy job growth was not supposed to come from fossil fuel businesses. It has been widely assumed that America had begun to exhaust those assets. Wind, thermal and solar business were anticipated to be the major creators of energy jobs. All three industries have stumbled due to high costs and slow adoption. The success of shale gas shows that new means of exploration and exploitation of fossil deposits still have a promising future.

Douglas A. McIntyre

It’s no surprise that Yahoo’s target price hasn’t changed, given the maelstrom surrounding the company and its bevy of potential suitors. TheStreet’s dividend yield, currently 6.3%, virtually guarantees investor satisfaction, even though the share price is down more than -9% in the past month.

Among those with higher target prices, Google’s median target price rose to $730.00, up just slightly from its previous level of $727.50, and LinkedIn’s median target price rose $4.00, from $88.00 to $92.00. In the past month, Google’s share price is off less than -1%, while LinkedIn’s has fallen -35%. The potential upside on Google stock is 25.1% and the potential upside on LinkedIn is 59.8%.

LinkedIn’s share price suffered from the end of the lock-up period that prevented insiders from selling shares. Another batch of locked up shares are due to be released in February, and there won’t be much improvement in LinkedIn’s share price until that date is passed.

AOL’s median target price has risen $1.00, from $17.00 to $18.00, and Baidu’s target has gone up from $191.00 to $192.40. Current share prices for both are lower compared with a month ago, and the implied upside on AOL stock is 30.3% while the implied upside on Baidu is 52.9%. Bankrate’s target has risen from $21.50 to $22.00, and its share price is also up more than 9% in the past month. The potential upside on Bankrate shares is 21.2%.

Demand Media’s median target price fell from $15.00 to $12.00, although its current share price is 7.7% higher than a month ago. The potential upside in Demand Media’s shares is 72.7%. Monster Worldwide’s target price fell from $15.00 to $11.75, and its current share price is -22.1% lower than it was a month ago. The potential upside at Monster is 69.1%.

With the exception of TheStreet, none of these companies pays a dividend.

We explained a while ago why we think that Baidu is a better play than Google or even Apple Inc. (NASDAQ: AAPL), and nothing but a few decimal points have changed since then. The company’s potential more than justifies its high upside.

Paul Ausick