Customers, employees, shareholders, and taxpayers hate large corporations for many reasons. 24/7 Wall St. has looked at many of these issues to choose the 15 most hated companies in America. We evaluated each company based on five criteria. First, employee impressions, using research firm Glassdoor and other services, were reviewed. Second, we considered total return to shareholders from these companies over one-year, two-year and five-year periods, compared to the broad market and other companies within the same sector. Several firms on our list are not public. Third, customer satisfaction numbers and reputation figures were analyzed from a broad array of sources, including Consumer Reports, JD Power, the MSN/Zogby poll, Vanno, and the University of Michigan American Customer Satisfaction Index were examined. Fourth, brand valuation changes were also reviewed based on data from Corebrands, Interbrand, and Brand Z. Finally, the views of taxpayers, Congress and the Administration of these companies were considered where applicable.
24/7 Wall St. analyzed data on hundreds of companies to produce this final 15.
Unfortunately for some of the companies on this list, they are widely despised because of the businesses that they are in. An airline or franchise operation which deals with millions of customers, particularly when its resources are stretched due to the economy, is likely to make a lot of enemies among customers and workers. This puts airlines and firms with a large number of retail outlets at a disadvantage compared with companies with few customers, particularly if those customers are other large businesses. Airlines have also had to cut huge numbers of employees which affects both their relationships with workers and customers who may suffer from cuts in service.
Several companies which seem to belong on the on this list due to recent news, particularly Goldman Sachs (NYSE:GS) and AT&T (NYSE:T), are not there. Goldman was inundated by negative publicity because taxpayers and Congress are concerned that the bank’s pay packages are far too generous. But, Goldman has done a very good job for most of its customers. Its stock has nearly doubled over the past year. Goldman’s employees, particularly those who are rich because of their tenure at the firm, are great supporters of the bank.
AT&T has also been in the news a because of problems that its 3G customers, especially those who own Apple (NASDAQ:AAPL) iPhones, have had with the AT&T wireless service. But, AT&T has millions of other business and residential customers, a brand which continues to be a powerful marketing tool, and earnings which have kept most of its shareholders loyal.
Comcast (NASDAQ:CMCSA) was also considered for the list. Its customer satisfaction ratings are low. A number of its shareholders are upset over its deal to take control of NBC Universal. But, Comcast’s return to shareholders has been adequate, based on 24/7 measurements. Many companies could be added to this list if there were only one factor under evaluation, be it their relationship with employees, shareholders, or customers.
It is worth noting that two companies that might have been on a list of this kind five years ago, Microsoft (NASDAQ:MSFT) and Wal-Mart (NYSE:WMT) are not. Each company has, as far as the public, customers, and employees are concerned, improved its business practices, at least to the extent to which it affects the way that the companies are viewed based on the 24/7 Wall St criteria.
Here is the list in rank order starting with AIG, the most hated company in America:
1. AIG (NYSE:AIG) is the most hated company in America. Taxpayers despise the firm because it received nearly $180 billion in government aid. AIG has fired enough people and operates under such pressure to turn around its operations that employee morale is understandably low. The firm’s brand is worth so little that some of its divisions have aggressively begun to market themselves under names other than AIG. Vanno’s company reputation index puts AIG as No. 5585 among the 6075 firms that it measures. AIG’s market cap lost over 99% of its value during the last two years, virtually wiping out the firm’s equity investors. CEO Robert Benmosche pressed for a rich pay package while his predecessor worked for $1.
2. United Airlines (NASDAQ:UAUA) has been one of the worst performing airline stocks over the last two years, down almost 60%. United ranked last along with US Air (NYSE:LCC) in the 2009 JD Power survey among traditional carriers as it posted poor results for “reservation experience”, “check-in experience”, and “costs and fees.” United also ranked last in a recent University of Michigan Ross School of Business consumer satisfaction survey. Research that 24/7 Wall St. examined revealed that employee work satisfaction was very low.
3. Level 3 (NASDAQ:LVLT) is one of the nation’s largest broadband networks, a roll-up of a number of smaller businesses. The execution of the business strategy was flawed and integration problems were severe. Level 3’s stock is down 50% over the last two years. The company has been plagued by customer complaints. Level 3 has fired a number of people over the last three years due management’s ability to quickly and successfully integrate its patch-work of businesses, and its inability to reduce the firm’s huge financial losses.
4. Hertz (NYSE:HTZ), the largest car rental company in the US, has had its share of financial problems. This has resulted in massive layoffs. Hertz stock has performed about as well as the DJIA over the last two years. Some investors became concerned when Hertz was placed on the Audit Integrity list of American companies most likely to go bankrupt. Hertz filed a suit against the research company but subsequently dropped it. Like many of the largest airlines and other travel firms, Hertz suffers from being in a business in which it has to satisfy millions of customers during an economic downturn. Hertz makes the Glassdoor list of “worst companies to work for.” Hertz was also on the primary list in an investigative report into “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers” which was produced for a hearing on the subject by the US Senate Committee on Commerce, Science, and Transportation. Vanno gives Hertz low rating for both customer and employee satisfaction
5. Citigroup’s (NYSE:C) relationship with its customers, shareholders, and investors was badly damaged by the decisions of its management, under the leadership of former CEO Sandy Weill, who cobbled together the ungainly financial supermarket through acqusitions. Citigroup built a massive financial institution with divisions which took unimaginable risks. This corporate culture of risk taking nearly ruined the company. Citi rates at or near the bottom of the JD Power regional bank rankings. It is also near the bottom of the JD Power credit card satisfaction survey. Citi has been damaged by the impact of the overall reputation of credit card companies which has been hurt by the recession. Many credit card firms have begun to add new fees to offset government restrictions on rates further enraging customers. Citi is the second largest issuer of cards in America, with 92 million cards in circulation. The value of the company’s shares is off about 90% over the last two years. Citi’s CEO Vikram Pandit is not considered up to the job, and on his watch the bank has fired tens of thousands of people.
6. K-Mart is one of the two large retail units of Sears Holdings (NASDAQ:SHLD). Sears has worked on a turnaround since it merged with K-Mart in late 2004. Since the merger, the Sears stock is down about 10%. The American Customer Satisfaction Index for Sears Holdings stores was below all major discount and department stores except Wal-Mart during the last full year of the poll. K-Mart gets poor scores for employee satisfaction from Glassdoor and parent Sears does poorly on the employee satisfaction list from Vanno.
7. Blackwater Worldwide, the military contractor, is a special case because it does not show up on any major reputation surveys and it is a private company, although based on news stories is may be one of the better-known company names in America. Blackwater specializes in security and has been heavily involved in providing services for the US government in Iraq. The company was founded by Erik Prince, a former Navy SEAL and heir to an automotive-part empire. Blackwater was implicated in an event in which 17 Iraqi civilians were killed. The Iraqi government revoked the company’s operating license following this. While an American court recently cleared the company of any criminal activity, the Iraqi government has stated that it intends to file a lawsuit against Blackwater in both U.S. and Iraqi courts. In an effort to distance itself from its negative public perception, the company recently changed its name to Xe Services LLC. Blackwater operates out of an area in North Carolina knows as the Great Dismal Swamp. The inclusion of the company on the list is the only example of an “editor’s choice”, not based on our normal criteria.
8. Dell (NASDAQ:DELL) has underperformed its peer group in the stock market by a wide margin. Dell’s shares are off over 30% over the last two years while the share of Hewlett-Packard (NYSE:HPQ) and IBM (NYSE:IBM) have shown impressive gains. The PC industry’s score has been steadily increasing in the American Customer Service Index over the last decade, up from a 71 of 100 rating in 2001 to 75. Dell’s score has dropped from 78 to 75. Dell trail Apple, Toshiba, and HP is many Consumer Reports measurements of laptop computers by screen size. It does somewhat better in the slow-growing desktop business and has abysmal scores in the fastest growing part of the PC industry—netbooks. In the netbook category Consumer Reports ranks Dell behind seven other manufacturers. In Forrester’s recent Customer Experience Index rankings, Dell was behind every other PC maker measured. Dell employees have been through a series of layoffs which included 8,800 people in 2008 and at least another 1,400 last year. Dell fired another group in November.
9. Abercrombie & Fitch (NYSE:ANF) The retailer has posted dismal results over the last two years, with its same-stores sales down by double digits most months. The company is the only retailer to make the 2009 MSN “Customer Service Hall of Shame” two years in a row and the only retailer in the top 10. Employee reaction to the company and CEO as measured at Glassdoor is relatively poor. Employee and customer satisfaction are both low in the Vanno ratings. Abercrombie & Fitch shares are down over 50% during the last two years.
10. Chrysler is once again a private company, after the government shepherded it through Chapter 11. The car firm is managed by Fiat, which has taken an equity position in Chrysler but has put in no capital. Consumer Reports puts the Chrysler, Jeep, and Dodge brands at or near the bottom of its reliability ratings, suggesting that consumers who buy the company’s cars are disproportionately unhappy compared to other car buyers. Chrysler also does poorly in most JD Power research. Chrysler’s ongoing waves of lay-offs and employee buyouts have irreparably damaged its relationship with workers and with many of the communities where is has, or had, operations.
11. Dish Network (NYSE:DISH), the satellite TV company, has had a drop in its stock price of over 35% during the last two years. The Wall Street Journal recently pointed out that the firm has lost customers to rival DirecTV (NYSE:DTV). Dish has had customer service issues that have undermined its efforts to keep clients. The firm did add subscribers in the most recent quarter. Dish’s reputation was hurt in the recent past by the problems that led it to pay $6 million in a settlement with 46 state attorneys general, resolving allegations that the satellite TV provider and its third-party retailers violated do-not-call rules and engaged in deceptive and unfair sales practices. Recent JD Power data puts Dish service ratings behind offerings from AT&T (NYSE:T) and Verizon (NYSE:VZ).
12. Rite Aid’s (NYSE:RAD) stock is down nearly 50% over the last five years and nearly 30% over the last two. The company’s purchase of Brooks and Eckerd stores was handled badly and Rite Aid sustained huge losses. Rite Aid has had repeated labor problems and has faced legal and political actions because the way it treated workers. These complaints may not have always be justified, but they have significantly undermined employee loyalty. Rite Aid’s reputation scores from both Glassdoor and Vanno are particularly low. The fact that Rite Aid has almost 5,000 store, tens of thousands of low-paid workers, and millions of customers serving a population that is likely to be unhappy with much of the healthcare system, makes it particularly difficult for the firm to improve its reputation.
13. Gibson Guitar is the lowest rated company on the Glassdoor list. Gibson is privately held. The firm is based in Nashville. Gibson got into financial trouble in the early 1980s and was rescued by a group of investors in 1986. Gibson had several layoffs that cut its workforce by about 20% by mid-2009. There have been a number of complaints about the quality of the company’s products recently. In November, it was revealed that Gibson was being investigated for violating the Lacey Act, a key piece of environmental law, for importing endangered species of rosewood from Madagascar. The alleged violation has gone over poorly with Gibson customers and may hurt sales.
14. Forever 21 is a clothing retailer. A large number of the items it sells are private label. Forever 21 has been attacked for its labor practices. A number of employees took legal action against the company and the dispute was only settled when these workers were given “back wages.” The use of fur in some of its garments has been attacked by PETA. They have been accused of blatantly knocking off designs from designers including Anna Sui, Gwen Stefani, and Diane von Fürstenberg. The clothing company was criticized recently for its refund policies.
15. Sprint (NYSE:S) is a great example of the inability of strong management to fix a company that is in real trouble. JD Power rates Sprint at the lowest end of its surveys on wireless call quality, customer care, and wireless retail sales. Consumer Reports ranks Sprint third among the four firms it rates for overall cell phone service. MSN/ Zogby has Sprint among the top ten companies in its “Hall of Shame”. Sprint also ranks at the bottom of the wireless industry in the American Customer Satisfaction Index. Sprint’s shares are down 70% during the last two years. Moody’s downgraded Sprint’s debt in November, putting further financial pressure on the company. Glassdoor reports that employees think well of CEO Dan Hesse but not as well of the company. Sprint has laid off so many people that employee hostility toward the company is not surprising.
Douglas A. McIntyre
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