Investing

24/7 Wall St. Ten Brands That Will Disappear in 2011

Moody’s Corp. (NYSE: MCO) may have the name with the largest negative brand equity in the US. Scandals about the company’s rating of mortgage-backed securities and allegations that the firm compromised it ratings process to get business have ruined the company’s image. Moody’s is more than 100 years old, but the reputation it built over those years is irretrievably lost. There is a chance Moody’s could be ruined by civil actions, four of which are pending, and by charges brought by the US government. Overseas authorities may bring a number of actions against the company as well.  Moody’s activities are almost certainly to be more regulated, which will squeeze margins and hurt sales. Moody’s may end up selling its accounts to a new rating company, which would probably hire many of its employees. Pacific Investment Management Co. and other institutional investors have talked about taking on some if not all the roles that the current rating firms play. Research houses like Alliance Bernstein could also take on some of those rolls. Part of Moody’s operation may stay alive, but there is not much left to salvage in the brand.

BP p.l.c.The case against the BP p.l.c. (NYSE: BP) brand is not so much that the company will enter bankruptcy. It is that BP may end up breaking into pieces for its own sake. This may be to put the liabilities for the Deepwater Horizon spill into a company that also holds escrow capital to cover the huge costs of clean-up and suits. BP may also want to separate its successful refining operations from its exploration business, or recreate an American- based company similar to BP America, which existed for two decades. A restructuring of BP would also allow the firm to take a badly crippled brand and give the oil operation a new name—much as it did when it changed its name from British Petroleum. The second time may be the charm.

RadioShack (NYSE: RSH) is one of the oldest retailers in the US.  It was founded in 1921 and in the early 1960s was purchased by Tandy Corp.  The Tandy name was used for some of Radio Shack’s retail stores.  RadioShack is currently a takeover target. There have been rumors that the company may be taken private via a leveraged buyout or purchased by Best Buy, probably for its locations. Best Buy (NYSE: BBY) would certainly not keep the RadioShack brand because it is considered downscale and does not have the reputation for quality products and service that Best Buy enjoys. RadioShack has already began to rebrand itself as “The Shack,” an indication that it knows the older brand is a burden.

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