Brand loyalty involves emotions as much as it does the logical reasons people become loyal to products. These are the primary forces that allow the best brands endure. Times change and so do brand features. The best brands evolve and change with the people to whom they are important. It is as much an art as a science to consistently find the right mixture or price, design, and features.

24/7 Wall St. looked at a number of famous brands which have been among the most important in America.  We chose from this list ten brands which were highly regarded and to which millions of people had strong attachments. We then identified those which had fallen from the status of most loved brands to that of also-rans, if they were even still existing brands at all.

Here is the list of brands Americans no longer love:

1. Chrysler

Chrysler has been one of the preeminent auto brands in the US since it was founded in 1925. The No. 3 American car company went into Chapter 11 in 2008.  The firm had flirted with bankruptcy in 1979.  The turnaround of the company by Lee Iacocca was one of the great business stories of the last several decades. The company lost some of its identity in 1998 when it merged with Daimler and the German firm took de facto control of management. That year Chrysler had about 17% of the US car market and sold 2.6 million cars and light trucks. Chrysler will be fortunate if it can sell one million cars in America this year. Chrysler is once again being managed by a foreign company, Fiat, which gained operational control as part of the bankruptcy.

2. Dell
Dell did as much as any American company to popularize the PC. Dell (NASDAQ: DELL) was founded in 1984 by one of the group of young tech entrepreneurs which included Bill Gates of Microsoft, Steve Jobs of Apple (NASDAQ: AAPL), Jerry Yang of Yahoo! (NASDAQ: YHOO),  Sergey Brin of Google (NASDAQ: GOOG) and Scott McNealy of Sun. In 1998, Dell had a market cap of $80 billion and Michael Dell was the youngest CEO ever to run a company in the Fortune 500. Dell helped revolutionize the PC industry in 1996 when it began selling computers online. Dell’s business fell apart from 2006 to 2007 largely because it did not create more innovative products beyond fairly standard PC development and the creation of a global retail network of stores. Hewlett Packard took Dell’s lead in PC market share. Dell’s reputation with the public was severely damaged by several federal investigations into its business practices and allegations that the company sold faulty computers even though some of its employees knew about the flaws.

3. Kmart
Kmart was the Wal-Mart of America before Wal-Mart existed. Its predecessor Kresge was founded in 1897. By the mid-20th century the chain began a period when it was one of the most successful retailers in the US by sales and the number of stores it operated. Kmart also grew through diversification and the acquisition of several major brands during the 1970s, 1980s, and 1990s.  These included The Sports Authority, Borders, Office Max, Payless Drugs, and Waldenbooks.  Kmart failed to make investments in the modernization of its stores which in many cases appeared run down. Kmart declared bankruptcy in 2002 and soon merged with Sears. The original American discount powerhouse had been damaged almost beyond comparison by poor management, too much diversification, and competition with Wal-Mart (NYSE: WMT) which had taken Kmart’s place.

4. Firestone
Firestone, founded in 1900, was one of the first tire companies in the world.  Firestone became the exclusive provider of tires for the Ford Motor Company NYSE: F).  The first winner of the Indianapolis 500 in 1911 used Firestone tires.  Every auto that won the race from 1920 to 1966 ran on Firestone.  The company was a large provider of munitions to the US government in WWII.  “Where ever wheels are rolling, the name that’s known is Firestone” is one of the most famous slogans in American advertising history.  By the middle of the last century Firestone had established its place as the number two tire producer, just behind Goodyear.  A series of accidents caused by defects in the company’s products led to lawsuits and penalties.  These events triggered financial difficulties forcing the sale of Firestone to Japanese tire giant, Bridgestone.  Since then, the American division of Bridgestone has been known as Bridgestone Firestone.  However, the original American brand has been de-emphasized over the last decade.

5. Time Magazine

Time Magazine, founded in 1923 by two Yale graduates, became the largest news magazine in the world.  Time had editions in almost every country in the world.  Its circulation was 4.2 million in the late 1990s. Time’s Person of the Year Award was one of the most anticipated news events annually. Time also had one of the largest international editorial bureau systems in the history of the magazine industry. Now Time’s paid circulation has decreased to 3.25 million.  News magazines in general suffered from periodicity in the world of instant news. Former rival US News no longer publishes regularly. Newsweek was sold to a new owner for $1 last year. Time’s brand was harmed by competition from 24 hour cable television news channels and then internet news websites that are accessible at no cost.

The purchase will mean much less to the market than Dell might hope. The PC company is still viewed as a maker of small computers and servers without the software and services businesses that rivals like Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM) have.

While HP and IBM shares have done well this year, Dell’s have not.

Michael Dell already owns 230 million shares of Dell stock. His $100 million investment is extremely modest and will certainly not make Wall Street ignore the firm’s many weaknesses.

Dell is not only late to some of the highly profitable markets that its rivals now control. It is so late that it will be costly to get market share, if it can get any at all.

Michael Dell will always be blamed for being too slow to realize that the tech market moved away from his company’s focus long ago.

Douglas A. McIntyre

Analysts, according to First Call, have the July quarter-end numbers pegged at $0.30 EPS and $14.63 Billion in revenues.  The coming quarter is expected to have $0.33 EPS and $15.1 Billion revenues. 

But here is the kicker: its chief rival, Hewlett-Packard (NYSE:HPQ), just beat earnings expectations and gave the all-clear signal ahead for guidance.  This morning we got a strong durable goods order that somehow showed a somewhat weaker PC-demand, but that should have been seen in any of the companies recent guidance so it may already be included and already factored in.  It is still a wildcard.  Dell has seen some problems causing delays in recent days, and now we have to see what news comes out over the next five days to see if the report or expectations ahead get changed.

Dell gave last preliminary numbers on May 31 and shares had closed at $26.91 on that day.  So at $27.50 mid-day Friday shares are up roughly 2% since then.  Shares have recovered off recent lows with the market but are basically in the middle of a trading range of $26 to $29 since last earnings; but we wont do any formal charting analysis until earnings are imminent. Options are also too far out to use right now.  Analysts still have targets pegged north of $32.00.

Next week is going to be a dead week with most of Wall Street either out the full week or at least the second half of the week ahead of Labor Day, and this is one of the few reports that may act as a catalyst either way on the earnings front. Stay tuned…..

Jon C. Ogg
August 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

As a result of accounting errors and irregularities identified in that investigation and in additional reviews conducted by management, the Audit Committee has determined to restate the company’s financial statements relating to fiscal 2003, 2004, 2005 and 2006 (and interim periods) and the first quarter of fiscal 2007. Dell’s previously issued financial statements for those periods should no longer be relied upon.  Here is the result of the findings in summary:

• Net revenue for each annual period is expected to be reduced by less than 1 percent of the previously reported revenue for the period.
• The cumulative change to net income for the restatement period is expected to be a reduction of between $50 million and $150 million and the cumulative change to earnings per share  for the restatement period is expected to be a reduction of $0.02 to $0.07.
• The largest percentage changes in quarterly net income and EPS are expected to be in the first quarter of fiscal 2003 and the second quarter of fiscal 2004, each with expected reductions of between 10 percent and 13 percent; the fourth quarter of fiscal 2005, with an expected reduction of approximately 7 percent; and the second quarter of fiscal 2005 and the third and fourth quarters of fiscal 2006, each with an expected increase of approximately 5 percent to 7 percent. Net income and EPS for each of the other quarters are expected to change by 5 percent or less.
• The adjustments are not expected to have a material impact on the current balance sheet.  The adjustments are not expected to have a material impact on cash flows during the restatement period and are not expected to have a significant effect on the reported results of future operations.

If you read on through the company’s release, you’ll see that the company also found intential manipulation to attain certain financial targets.  It also found it did not maintain an effective control environment with adherence to GAAP standards.  CFO Don Carty has also issued several remedies it will take to fix the control issues and to eliminate this ahead.  Lastly, it addresses the ongoing SEC investigation.  The SEC’s investigation is ongoing, and there can be no assurance that there will not be additional issues or matters arising from that investigation.

All that really matters to us is that the wrong doings are not so bad that they will topple Michael Dell.  He came back and everything he telegraphed and that had been indicated before could have led anyone with a half brain or more to conclude that there were some pretty big manipulations inside the company.  As long as Michael Dell is not toppled, then this is the news we have finally all been waiting for.  The company will begin reporting again, and that is all we really care about.  This just fixes the rearview mirror.  The restatements are bad as all restatements are, but they don’t look so crucial that past analysis was anything that will topple it.  It is even possible that some will be given a pair of cuffs instead of a slap on wrist by the SEC, but this still gets the issue mostly behind and should be viewed with some relief as long as it has no effect on Michael.  The doomsday crowd will say this is horrible and they will point to the years of intentional misgivings, but longer-term PC and tech investors will say this is what the market has been waiting for and the company can finally spend all efforts focusing ahead rather than dealing with the past.  You can find Dell’s full release here on their IR site.

Jon C. Ogg
August 16, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is the publisher of the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.