Being A "Most Admired Company" Loses Its Appeal (AAPL)(GE)(BRK)(SBUX)(FDX)(TM)
Most people who are in business put making a profit above maintaining a good image. They would like their customers to think well of them because it drives sales. But, being a pillar of public admiration is for churches, benevolent associations, and the Knights of Malta.
Fortune thinks corporate reputations are important and goes to a great deal of expense to put out a list of America’s Most Admired Companies.
According to the magazine, the 2008 list was pulled together “by the Hay Group which asked more than 3,700 people from dozens of industries to select the 10 companies they admire most. The winners all have strong records of innovation, leadership, and financial strength.”
The list is ten months old and looking at it now shows that a good reputation does nothing for a company’s stockholders.
At the top of the list is Apple (AAPL) which deserves some recognition for rebuilding itself with what many people believe is the best line of personal computers, multimedia players, and cellular handsets in the world. Unfortunately, Apple’s shares are down more than 50% in the last year. Many analysts think sales of its premium-priced products will falter in a recession.
The No.2 firm is Berkshire Hathaway (BRK), Warren Buffet’s company. By most accounts, Buffet has had one of his worst years as a portfolio manager. Berkshire shares are only off by about the same amount as the DJ IA over the last twelve months, but that does not comfort Buffet’s multitude of admirers.
The third spot on the list belongs to GE (GE), which should also should get the “How The Mighty Have Fallen” trophy. Troubles in its financial services operations and concerns that its huge and successful infrastructure division will be hurt by the recession have taken GE shares down 57% in the last year. GE missed many Wall St. estimates for its last two quarters. It also committed the cardinal sin of talking big about how well things were going when it turned out that they were not.
The No. 4 firm is Google (GOOG), which has almost completely lost the confidence of the investment community. Many analysts believe that its big growth years are over and that search advertising revenue has begin to flatten out. Some Wall St. researchers even think its revenue could go down next year. Google has already started to cut costs. Google’s shares are down 55% over the last year.
Toyota (TM) is the No.5 company on the Fortune list, followed by Starbucks (SBUX), and Fedex (FDX). Things only get worse from there.
Douglas A. McIntyre