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Politcal Worker (100+ posts)
2012 certainly seemed to be near-apocalyptic for some technology companies. While Apple, Google, and Samsung had a great year, other firms that were once the pillars of the technology industry seemed to teeter. And members of the last decade's Web 2.0 bubble rapidly deflated.
The gap between the winners and the losers of the current tech market is widening: Apple's market capitalization alone is more than those of the top five PC manufacturers combined; Google is worth 10 Yahoos. With economic uncertainties still lingering and the pie continuing to shrink for the also-rans, the coming year may prove one where natural selection thins the herd.
Some of the companies that flirted with death in 2012 might be primed for a comeback. RIM has emerged as a smaller, leaner, but still unprofitable company, with its future staked on one big bet: the BlackBerry 10 mobile operating system. Thanks to cost cutting (and huge staff cuts), RIM can stay alive even if BB10 doesn't take the world by stormbut the company does have to stem the loss of corporate customers for its messaging and e-mail services. Depending on how early 2013 plays out for RIM, the company could retake a comfortable third position in the smartphone market, or it could end up licensing the OS to others and getting out of manufacturing entirely. Barring an acquisition, RIM will likely make it out of 2013 alive.
But others are looking like they may be headed to the great bit bucket in the sky. Here are five companies in danger of entering the corporate afterlifeor of becoming the tech company equivalent of the living dead:
Nokia
Nokia CEO Stephen Elop.
While RIM will likely survive by evolving into a smaller form, Nokia looks to be headed to another, more grim fate. The Finnish handset giant has lost its identity by dumping its own smartphone OS efforts and embracing Windows Phone. It lost its market leadership in overall phone sales to Samsung. Nokia bled billions of dollars in losses over the last year and is now worth just 10 percent of what it was 5 years ago.
Nokia's revenue has been sliding nonstop since (and before) CEO Stephen Elop's arrival.
On the upside, Nokia has gotten a cash infusion from patent settlements with RIM and has just cut a deal with China Mobile to have its Lumia 920 subsidized by the carriermeaning it could get back a chunk of market share in China. But CEO Stephen Elop said in February 2011 that the company was looking at a two-year "transition period," and his time is just about up; many feel he needs to go in order for Nokia to survive. With the Finnish government having ruled out a rescue package for Nokia, it may need more than a new CEOit might need to be acquired to get through 2013.
Best Buy
Walked into a Best Buy recently? You may have noticed some rearranging of the deck chairs. Best Buy has tried to redefine itself into something more than a big-box electronics store, with its past acquisitions of Geek Squad (in 2006) and mid-market IT outsourcer MindShift Technologies (in 2011). After closing 50 stores in 2012, the company is hoping that smaller stores will save its remaining assets.
Even without the huge write-off in February, Best Buy did not have a great 2012.
But the scandalous departure of former CEO Brian Dunn (after being investigated for an inappropriate relationship with a female employee), a $1.7 billion write-off for restructuring costs to close those stores, plunging sales, and a lack of recent profit spell a repeat of the fate of former competitor Circuit City unless Best Buy can shed the cement overshoes of its sinking oversized big-box locations. Odds for survival: 50/50.
Groupon
Some businesses really, really don't like Groupon.
The question isn't what's wrong with the Chicago-based social couponing companyit's what's right about it. The answer appears to be, "Not much." Since the irrational exuberance over the whole Internet coupon business propelled the company to an initial public offering a year ago, Groupon has lost 75 percent of the company's value, cut over 600 employees, and has yet to do much better than break even. The company briefly flirted with profitability in mid-2012, before it had to pay out $8.5 million to settle a class-action suit and change a significant part of its business model. It turns out that its deadline-based "use or lose" vouchers were illegal under US law governing gift certificates. And the list of small businesses that are hating Grouponor out of business because of the way it workshas continued to grow.
Sure, there was that one moment of profitability. But for 2012, Groupon ended up about $20 above even.
CEO and founder Andrew Mason hasn't been fired by the board yet, despite grossly mishandling some accounting issues around the company's initial public offering and the waves of salespeople abandoning Groupon for greeneror at least less brownpastures. Of course, the whole social deals space is hurtingLivingSocial, Groupon's main competitor, has also been shedding employees, and Amazon blamed its 29 percent ownership of the company for its $274 million loss in the third quarter of 2012so maybe new management wouldn't help. Or maybe it's just that no one else wants to be captain of a sinking ship.
AMD
AMD needs its own cost control freaks, plus a whole new strategy, as it continues to take a beating.
This year was brutal for AMD, despite (or perhaps because of) a flight of new processors. Ever since the company launched its Bulldozer processors in October of 2011, AMD has been digging itself into a hole. The company is bleeding senior management as wellin the latest development, AMD's Corporate Vice President for Product Design and Engineering Michael Goddard decided to give himself a Christmas present and has left for Samsung.
AMD's sales have been dropping since the introduction of its Bulldozer processors.
There are new products in the pipeline and the company is restructuring, with plans to cut another 15 percent of its workforce. But considering it divested itself of its manufacturing capability in 2008 and cut 1,400 employees loose in 2011, there's not a lot more ballast that AMD CEO Rory Reed can cut loose.
Dell
Dell has practically erased its consumer business, revenue-wiseand some customers aren't crying too much over it.
Dell is trying to pivot to become a purely business PC companyor at least, its sales make it look that way. The company is now the number two enterprise server vendor in terms of units shipped, and it has significantly closed the gap with HP (thanks in part to HP's corporate disarray, and probably in part to the ongoing Itanium disaster). And Dell's server and networking sales in its most recent quarter were up 11 percent over last year.
That's the good news. The bad news is that with PC sales on the downslide, Dell has taken a larger share of declining sales than its competitors. Dell's consumer PC business is rapidly fadingit had negative revenue figures for the last reported quarter. And the company's "mobility" businesstablets and laptopsis sliding even faster, with revenues in the most recent quarter only 74 percent of what they were in the same period of 2011.
Dell's bottom line and market value continue to dive as the new year approaches.The company has had to work to shake off the stink of bad computers past (such as the Optiplex,which had a 97 percent failure rate) And Dell's failure in the smartphone business has only hastened its decline in the mobile market against Android and Apple devices. While betting on the higher-margin business market may help, and the acquisitions Dell has made (such as SonicWall and Wyse) were probably better bets than HP has made, something has to giveor Dell may be the new HP in all the wrong ways.
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