In the part two of this series of articles, we listed 10 more companies (+ 1 bonus!) that failed. We are now back with a part 3 list of 10 more companies that crashed and burned.
Want to check if there are flashing red flags in a company’s finances? Check out this list of 10 signs which could mean that a company is in financial trouble.
Segway was an up and coming startup specializing in personal mobility vehicles. Founded in 1999 by Dean Kamen after he patented a self-balancing 2 wheel vehicle, the inventor and founder hoped that his new machine would allow people to get around faster and reduce the need for walking.
The hype for Kamen’s new creation was very high from the beginning. When the Segway PT was first launched in December 2001, it had estimated annual sales of 40 thousand vehicles, and the company was expected to reach a billion dollar valuation in a couple of years. However, the hype did not come to fruition. On September 2006, almost five years after it launched, the company had barely sold 23 thousand vehicles in total.
To add insult to injury, the Segway PT vehicles that were sold had to be recalled due to a software bug that caused the devices to reverse unexpectedly, potentially causing injury to riders. The company also failed to make any profit from the sale of the vehicles and was saddled with a 100 million debt from the R&D of the Segway.
In January 2010, Dean Kamen sold the company brand name and Segway patent rights to the Hesco Bastion organization, and stopped participating in discussions for the company’s direction. Tragedy struck just ten months later, when the chairman of the Hesco Bastion group passed away after an accident that involved driving the Segway off a steep rock.
On 1 April 2015, Segway was sold off to Ninebot, a Beijing robotics company.
Palm was the brainchild of Jeff Hawkins, who founded Palm Computing with his two co-founders, Donna Dubinsky and Ed Colligan in 1992. The first product of the company was the Palm Pilot 1000, a Personal Digital Assistant (PDA). It was one of the first small size devices that can be used to communicate on the go. The Palm Pilots were a hit with consumers, and the company managed to sell enough devices to create the next few versions: Palm Pilot 5000, Palm Pilot Personal and Palm Pilot Professional.
3M acquired the company in 1998, and Palm Computing became a part of 3Com. Unhappy about the way 3Com steered the direction of Palm devices, the trio left the company. Newer Palm devices were given mobile phone capabilities such as email, SMS and MMS, and evolved into the Treo 700w under 3Com. The Treo 700w also ran on Window OS, but sales did not pick up for the brand.
HP later acquired the brand for 1.2 billion in 2010, and making the newly acquired division in charge of mobile development. However, sales continued to disappoint even after unveiling its newest line of products like the TouchPad. The products were later discontinued by HP and the Palm brand was resold to TCL, which made Alcatel smartphones.
Jawbone was a wearable technology founded in March 1998 by two Stanford undergraduates. Originally known as AliphCom, the company sealed a deal with the US Military to design and research wearables for soldiers to talk during combat and low audibility conditions. The duo raised 1.5 million dollars in seed funding in June 2002 after developing a mobile phone headset that censors outside noise.
Fast forward five years later in January 2007, Jawbone released its first commercial wireless headset. The startup subsequently released three more new version of its product: New Jawbone in May 2008, Jawbone Prime in April 2009 and Jambox in November 2010. The company promoted their New Jawbone product when California banned handheld devices like mobile phones when driving by offering a $20 discount to all drivers who received write-ups for using their cellphones on the go.
In 2011, AliphCom officially rebranded itself as Jawbone, after its signature Bluetooth headphone products. Due to commercial success of its products, Jawbone was estimated to be worth 1.5 billion by 2012. With the name switch, the company ventured into the new wearables industry with UP in November 2011, competing alongside brands such as Fitbit, Garmin and Xiaomi.
The move, however, was a bad business decision. Jawbone was unable to compete with Fitbit bands in terms of technology, Apple watches in terms of system integration with the iPhone and Xiaomi bands in terms of pricing. The company began to fall apart. Despite having huge pools of venture funding, they only managed to clinch 4.4% of the total market share for fitness tracking wearables.
In 2017, Jawbone entered liquidation and sold off its assets to pay back investors.
The Woolworth Company was originally founded in November 5, 1909, by the American entrepreneur Frank Woolworth. Woolworth was a businessman who pioneered customer self-selecting items for purchase, and for selling items at a fixed price as we do now in supermarkets.
Woolworth opened a chain of retail stores selling extremely cheap but huge variety of items at three and six pennies each before World War Two, and it was very successful. During the opening day of his first store in the UK, the shop was practically empty at the end of the day.
Despite World War One, he continued to open up stores across the UK and US, and had 40 stores by the end of the war. By 1923, five years after the First World War, the company had expanded to 130 stores across England. The thousandth store was opened in May 1958 in Boundary Road of Hove. Woolworth’s popularity as a pocket-friendly consumer choice caused it to become a household name in the UK, with customers affectionately referring to it as ‘Woolies’.
In 1982, Woolworth merged with Kingfisher plc, but de-merged in 2001 when Woolworth went public to get listed on the London Stock exchange. However, business was slowing down. Since the 1980s, many large Woolworth stores shrank in size, and were targeted at lower income English people. Consumers who did not want to be viewed as ‘cheap’ tried to avoid the store.
The following decade, Woolworth attempted to follow Walmart’s footsteps to create megastores, but the plan ultimately failed due to the de-merger from Kingfisher plc. In 2004, admitting defeat, Woolworth sold one-third of the megastores to other retailers such as Tesco.
The financial woes for Woolworth continued into the 2000s. The company was badly hit during the financial crisis in 2008. On November 2008, Woolworth entered restructuring. Barely a month later, on December 2008, Woolworth announced the closing down of its 800 plus retail outlets and retrenched over 27 thousand staff.
In October 2015, Woolworth officially ceased operation in the UK.
Borders was a mega bookstore chain founded in 1971 by two brothers, Tom and Louis Borders, while they were studying at the University of Michigan. They had created a computer system to keep track of sales and inventory in bookstores, and wanted to try out their new system in a book business. The first Borders mega-store was opened in 1985, with hundreds of titles in inventory and a small café. Robert DiRomualdo, a former CEO of Hickory Farms, was hired to help the company grow in 1988.
In 1992, Kmart acquired the startup and merged it with another bookstore chain Waldenbooks, which it acquired eight years earlier to form Borders-Walden Group. Kmart hoped that senior executives could save the ailing Waldenbooks. However, most of the senior staff left, leaving Kmart scrambling to handle pressure from other giant book retailers like Barnes and Noble. The Borders retail chain was later renamed Borders Group for an IPO in 1995.
Borders then launched internationally with over 40 stores. The company wanted to expand in Canada, but was rejected and launched its first international store in Singapore in 1997. The company also acquired a British books retail chain ‘Books etc.’ along the way.
Unfortunately for Borders, their aggressive overseas expansion project did not do as well as they hoped. In December 2009, just 11 days before Christmas, the UK branches of Borders declared bankruptcy. Store in other overseas locations did not fare well either, with most closing down except in Malaysia, Dubai and Oman.
Back at home in the US, Border’s failure to catch up with upcoming contenders like Amazon in the digital space was devastating their business. Sales had dropped for three holiday seasons and the company’s income had dropped over a billion dollars by 2010. The retail giant tried to save itself by closing off over a hundred stores, extending its loans and delaying payment to suppliers, but its efforts were futile. On February 16 of 2011, the company folded and liquidated its assets. Over 11 thousand lost their jobs at the company.
The original Borders Group was officially disbanded on September 28, 2011.
MapQuest started in R.R. Donnelley & Sons Company, as a service in one of the divisions of the Fortune 500 Company. When it spun off and launched on the web in 1996, MapQuest was the first for-profit mapping service in the US. Being able to show the shortest route to a destination was a huge upgrade for many people, as the alternative was to carry around bulky and heavy map books when they wanted to go on a drive.
About three years after MapQuest was released, MapQuest got an IPO and traded on the Nasdaq. AOL acquired MapQuest for $1.1 billion in 2000, and the company became one of the products in AOL’s umbrella of services.
Unfortunately, when Google Map was launched in 2005, they created better features such as dynamic search and a cleaner UI interface which MapQuest was unable to produce. As Google Maps climbed to the top of the Map Search world, MapQuest was unable to entice users to adopt its mobile application. MapQuest was also unable to compete with its second contender, as there were also better UI Maps in Apple devices. The other problem was also that MapQuest was only usable in the US, while Google and Apple maps covered worldwide locations.
In May of 2015, MapQuest became a subsidiary of Verizon when AOL was acquired. The Map company was later sold to System1 in 2019. Even though MapQuest has not yet declared bankrupt or closed down, the company is slowly sliding into oblivion as the number of users using the company’s product decreases every day.
AltaVista was a Web search portal launched in 1995 by researchers in Digital Equipment Corporation (DEC). It was the first web search of its kind: text search with a database of World Wide Web (WWW) websites. The search engine was a success from day one. Over 300 thousand queries were serviced on the first day, and by 1997, they were serving over 80 million requests daily.
Compaq acquired DEC in 1998, and refashioned AltaVista to include email and shopping. Trying to one up Yahoo, Compaq removed the one box search interface from AltaVista to turn the search engine into a web portal. Not believing that the company could make money with a search engine, AltaVista was later sold to CMGI, who was preparing for AltaVista to go public in April 2000. Unfortunately, due to bad timing, the dot-com bubble burst and AltaVista’s IPO was retracted.
Unfortunately for AltaVista, while they were busy fighting Yahoo for market share, the new startup Google was rapidly gaining a foothold by providing a better search service, based on the number of backlinks a page had. Google also featured the simple one box search that users loved, which AltaVista had gotten rid of from trying to compete with Yahoo.
In 2003, AltaVista was sold again to Overture for a sum of $140 million, a far cry from its heyday. Less than five months later, Yahoo acquired Overture, in turn getting its old competitor AltaVista.
In July 8, 2013, Yahoo shut down AltaVista quietly, and redirected all AltaVista’s pages to Yahoo’s web portal.
3. GM (General Motors)
The origins of General Motors came a long way. It descended from Durant-Dort Carriage Company, a firm which sold horse drawn carriages back in the 1900s. In those days, the new hot thing wasgasoline-powered vehicles. Wanting a piece of the action, the founder William Durant bought a small automobile company, the Buick Motor company in 1904, and created General Motors as a parent company.
GM quickly acquired a few more automobile companies, including Cadillac and Pontiac. The company even tried to buy Ford Motors in 1909, but the deal did not go through. Due to over-leveraging when mass acquiring these companies, Durant was kicked out of his own company by his board members. GM was re-formed in Detroit in 1916, with the name General Motors Corporation.
Refusing to give up, Durant later co-founded Chevrolet. Two years after GM reformed, it merged with Durant’s new company and Durant got kicked out of the company once again. The company continued to grow, and had 50 percent of all car sales in America.
In June 2009, however, General Motors filed for Chapter 11. Barely a month later, GM sold assets including its brand name, causing the GM brand to become a new company. To try to keep jobs and the giant car company afloat, the US Treasury pumped 50 billion dollars into the company and sold the GM stocks four years later at 39 billion dollars, resulting in over 10 billion in losses of taxpayer dollars. The general agreement for GM’s failure was the poor quality of vehicles, and bad business decisions made by GM’s managements.
In 2010 however, (yet another) new GM went public with one of the largest IPOs in the world.
Kodak was founded in 1888 by George Eastman who sold cameras. Like the printer and cartridge business, the main profit of the business came from the sale of film and ink. The company was a huge success, and had 90 percent of market share in the camera business for almost a hundred years till 1976. In 1975, Kodak created the world’s first digital camera.
In the 1980s, a new rival Fujifilm washed ashore from Japan into the US market. Kodak refused to take the new competitor seriously, and turned down the offer to be the official film in the 1984 Summer Olympics in Los Angeles. The Games become Fujifilm’s entry into the American market. With aggressive advertising and promoting itself as a cheaper alternative to Kodak, Fujifilm successfully wrestled market share from Kodak, getting about 17% by 1997. With the drop in sale, Kodak’s profit dropped more than 1.5 billion dollars.
Despite designing the first portable digital camera, Kodak refused to develop the technology further, dreading that such an invention would kill its main film selling income stream. Failing to keep up with technology changes, however, caused Kodak to seriously fall behind in the next decade. As digital cameras become increasingly popular in the 1990s, film sales began tumbling. Kodak made a desperate turnaround to digital cameras in 2001, but lost sixty dollars for every device sold.
As the digital camera market began shrinking in 2010 due to smartphones, Kodak was bleeding money. In a last bid attempt to save Kodak, the then CEO Antonio Perez outsourced its in-house assembling plants and fired 27 thousand workers. Despite the massive job cuts, Kodak filed for bankruptcy in January 2011, and got delisted on the New York Stock Exchange.
Shifting its focus to printing, Perez attempted to turn around the company. On the first day of 2015, Kodak declared that it would now focus on ink and 3d printing systems solutions, with a smaller focus on the ever-declining film market. In 2020, Kodak attempts to change direction to pharmaceutical company, while negotiating a loan of over 700 million from the US government.
Like many of the big companies on this list, the Finnish former phone giant Nokia has a long history. When Nokia launched in 1865, the company dealt in paper products, and later moved into rubber products.
About a century after building its first paper mill, Nokia Corporation was formed from the merger of three companies in 1967. Nokia had four main businesses strongholds, namely paper, rubber, cables and electronics. The Soviet-Finland trade agreement allowed Nokia to get a major share of the Russian market. Finland also worked with the US on the side regarding Russia’s technological advances, to convey Finland’s stance of neutrality.
In the late 1990s, Nokia’s mobile phone product began to take off. The company produced its hundred millionth cell phone in December 1998, becoming the top selling cell phone brand. Nokia made 2.6 billion euros in profit with 20 billion euros in sales in the year 1998 alone. The phone giant reportedly made 31 billion euros from 1996 to 2001 selling its iconic Nokia phones.
When Apple launched the iPhone in 2007, Nokia vowed to decimate the up and coming smartphone company. At that time, Nokia held 50 percent of the market share in all smartphone sale, while Apple only had a 5 percent foothold in the market. Three years after the first iPhone launch, Nokia released their ‘iPhone Killer’, but consumers preferred the superior Apple devices.
As the quality of Nokia’s smartphones continued to dwindle, iOS and Android smartphones managed to dislodge the former mobile phone king from its throne. In an attempt to win back the market, Nokia partnered with Microsoft to unveil the Windows Phone, but the product failed to garner enough interest or sales. Nokia’s share dropped to below $2 in 2012.
To stop further losses, Nokia sold its mobile device arm to Microsoft in September 2013.
Bonus. Lehman Brothers
Lehman Brothers was a century old company formed in 1847 by the three Lehman brothers, Henry, Emanuel and Mayer. They started with a small dry goods store, later expanding to cotton, and diversified into coffee. The company later morphed into an investment bank, becoming the fourth largest investment bank on Wall Street.
In late 1990s to early 2000s, the housing estate market was booming. To ride this wave, Lehman Brothers moved into the mortgage loans market and snapped up five mortgage lender companies. The parent company became highly leveraged, and had to keep borrowing large sums of money to keep loaning to mortgage lenders. In 2004, Lehman Brothers was lending out 50 billion each month, and for the next three years, the firm made huge profits to the tune of 19 billion dollars.
In late 2007, however, as recession hit and the housing bubble began to burst, Lehman Brothers was scrambling to get out of the mortgage loans market. One of their subsidiary companies BNC Mortgage folded, putting 1,200 people out of work.
As the real estate market continued to collapse, the parent firm was swimming in debt while its stock value declined rapidly. The company’s value dropped over 70 percent in value in just six months, with investors losing confidence and dumping their stocks in a panic. To try to halt the closure of the company, Lehman Brother executives pushed out a plan to axe 1500 jobs in August 2008.
However, even with the various measures, the company failed to stop its rapid downturn. Executives tried to negotiate sales of its assets with other investment banks, but the talks fell through. On 15 September 2008, with over 600 billion in both debt and assets, Lehman Brothers found for bankruptcy, causing major shockwaves throughout the economy and the world. Barclay bank took over the remaining assets of Lehman Brothers for 1.75 billion for every unit.
In your opinion, which is the biggest company failure? Leave your comments below!