Vulnerable Companies Open for Takeovers
Ronak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There are many companies in the U.S. that were sailing through beautifully and were considered very good companies at one point in time. Honestly in each company the CEO is the most crucial person who makes or breaks the company. If we notice in the past, companies such as Apple, Microsoft, Dell etc.. have had visionary CEOs who have got it up to the place they are in today’s world.
MetroPCS Communications Inc. (NYSE: TMUS) is formerly known as General Wireless, Inc (a mobile phone service provider). Its share prices are down from a 52-week high of $17.84 to $5.86-very close to their period low price. The major reason being that the investors have lost faith in the company and there are no buyers for the shares. Its Q1 earnings were so low that analysts downgraded its shares. They had lost the faint chance they had of competing with the big competitors such as T-Mobile (owned by European giant Deutsche Telekom), AT&T, Verizon and Sprint-Nextel. The news doing the rounds is T-Mobile has takeover negotiations going on with the company.
Salon.com (dynamic & radical online magazine) is part of the Salon Media Group and was one of the revolutionary news and commentary websites of the 1990’s when E-commerce was introduced to the web. They were one of the first movers into this field. In the last few years they were given stiff competition by better financed sites such as The Atlantic & Washington Post-owned State. They lost their CEO & CFO recently. New management was brought in but they need more than that. At the end of Q4 ’2011 they only had $149,000 in the bank with a liability of $12.7 million in loans. The investors are backing out and thus at this point no further bail out is likely to come except if someone buys it up.
Pacific Sunwear (NASDAQ: PSUN), it is a clothing company based in California manufacturing accessories, sunglasses, shoes and swimwear. The GMI ratings have put them at the risk of going bankrupt. Five years ago their stock was traded at $23 and recently it fell off to a low of a mere $1.50. Surprisingly in the previous quarter they have had a loss of $15 million on total revenue of $174 million. The major reason being a very low or no working capital. They have had financial credit from Wells Fargo & Company (NYSE: WFC) which is a multinational financial company operating all around the globe. Pacific Sunwear has 729 small outlets throughout the U.S. There is a very high probability that it would be taken over by a bigger retailer or might go out of the market in the near future and their inventory be sold out at cheap prices to other retail stores.
American Suzuki Motor Corporation , In the first five months of 2012 they have managed to sell about 10,695 cars and light trucks which is 3.9% less than what they sold in 2011 during the same period. They have at the moment just a mere 0.2% of the whole market share in the car segment. They have developed a very low standing in the market. Their new strategy of aggressive zero percent financing package for 72 months on all their cars, trucks and SUVs in 2012 didn't do much to improve their position in the market. Volkswagen AG is the biggest shareholder in Suzuki with 19.9% stake. They are good in power trains, body and material but fail miserably in features and accessories as compared to the other manufactures.
Therefore, as we notice a company or an enterprise has to evolve all the time. Staying stagnant is not an option in today's world. One always has to keeping knowing what is the requirement of the market, what is is that the consumers want and provide them with utmost care and respect. Customer satisfaction is really important because they always go for the products and manufactures who will pamper their needs, as there is no dearth of manufactures for it. The sick industries and companies should either join hands with the superior companies or they shall perish in the near future, that is the MANTRA for today.
ronlovesyou has no positions in the stocks mentioned above. The Motley Fool owns shares of Wells Fargo & Company and has the following options: short OCT 2012 $33.00 puts on Wells Fargo & Company and short OCT 2012 $36.00 calls on Wells Fargo & Company. Motley Fool newsletter services recommend Pacific Sunwear and Wells Fargo & Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.