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Friday
Dec302011

ABC News Lists Top 10 Business Blunders of 2011

Jin Lee/Bloomberg via Getty Images(NEW YORK) -- Businesses make mistakes all the time. Unfortunately, when they blunder, the repercussions can be wide, from customer data being compromised to employees losing their jobs and shareholders getting wiped out.

Here's a look at 10 foul-ups of 2011:

1. Bank of America: The $5 Fiasco

When Bank of America announced plans in late September to charge customers for using their debit card for purchases, customers expressed their outrage in dramatic fashion.

Over 150,000 people signed a petition asking the bank to cancel the $5 monthly fee and over 650,000 people joined Bank Transfer Day, shifting funds to credit unions.

The bank, still reeling from the mortgage meltdown, relented and announced on Nov. 1 the fee's cancellation.

2. Netflix: Red Envelope Company Sees Red

DVD-rental company Netflix lost 800,000 of its 20 million members after it announced a new pricing plan and streaming service, Qwikster, in October. CEO Reed Hastings soon after canceled plans to split the service and apologized to customers, but the damage was done. Netflix's stock price, which was near $300 a share in mid-July and has a 52-week high of $304.79, recently traded at $70.

3. Family Radio: Doomsday Averted, But Not for Radio Station

Companies frequently miss forecasts but when Harold Camping, president of radio station Family Radio, predicted the end of the world twice this year, some may have breathed a sigh of relief.

Camping first predicted the end of the world for May 21, 2011 investing heavily with millions of dollars in a national advertising campaign. After the world pressed on, Camping then changed his forecast to Oct. 21. Camping reportedly apologized for his failed predictions.

"I should not have said that, and I apologize," Camping said, according to San Francisco's KGO-TV. "God is merciful."

4. RIM's Blackberry: Worldwide Outage

Outages for Canadian company Research in Motion's (RIM) Blackberry mobile device caused a stir after service in North America, Europe, the Middle East, Africa and parts of Asia was knocked out Oct. 12.

David Yach, chief technology officer for software, said the problem originated in Europe and spread because there was a massive backlog of emails. CEO Mike Lazaridis apologized in a Youtube video.

The company's shares fell more than 75 percent in 2011, with growing domination from smartphones with Google's Android software and the iPhone. The Wall Street Journal called 2011 a "disastrous" year for RIM and investors and analysts have called for the board to take stronger control of the company.

5. Goldman Sachs: Occupy Losses

In October, venerated investment bank Goldman Sachs reported its second loss since its IPO in May 1999, missing estimates for the second consecutive quarter. The company reported a loss of $393 million in the third quarter compared with a $1.9 billion profit one year ago. Worries in both debt and equity markets caused softness in the bank's revenue, according to Janney Capital Markets.

Goldman Sachs and other large banks attracted the ire of the Occupy Wall Street movement, which launched on Sept. 17, for their role in risky bets in the subprime mortgage market that contributed to the country's near financial collapse.

6. Sony PlayStation: The Year of the Hack?

In April, Sony Corp. said the credit card data of PlayStation users may have been stolen in a hack that forced it to shut down its PlayStation Network for a week, disconnecting around 77 million user accounts around the world.

The company said there was no evidence that credit card information was compromised, but said it could not rule out that possibility, leading PlayStation users -- and their parents -- to take precautions with their data.

Several other companies confessed to data breaches, such as investment bank Morgan Stanley and online marketing firm Epsilon.

7. Borders: Bankruptcy, Liquidation

After bookseller Borders filed for chapter 11 bankruptcy in February, the chain began liquidating bookstores and closed over 500 bookstores in the U.S. and Puerto Rico that it owned at the beginning of the year. Borders Group, based in Ann Arbor, Mich., announced 6,000 layoffs February 17 and 10,700 layoffs July 19.

8. American Airlines: Friendly Skies of Bankruptcy

American Airlines' parent company, AMR, filed for Chapter 11 bankruptcy on Nov. 29, faced with rising fuel prices and high labor costs. While operations continued for customers, the airline said its employees would be the most affected.

The company, based in Fort Worth, Texas, was the only major U.S. airline that did not seek bankruptcy protection after the 2001 terrorist attacks. Unlike other carriers, American did not merge with a competitor, and it was the only major airline to lose money last year.

CEO Gerard Arpey stepped down and was replaced by Thomas Horton, formerly the company's president, to run the nation's third-largest airline. AMR shares plunged 85 percent to just 25 cents a share in trading that day. Thursday the New York Stock Exchange announced that the company's shares would be delisted.

9. U.S. Postal Service: Shuttering Post Offices

The U.S. Postal Service had a dramatic last few years as post offices have closed in rural towns, and in 2011 the organization was near a default and faced a $9 billion deficit.

With the prevalence of e-mail and delivery competitors FedEx and UPS, the future of the postal service is very much in doubt.

On Sep. 15, the Postal Service announced it would begin studying 252 out of 487 mail processing facilities for possible closure but it has not yet confirmed closures of those facilities.

The Postal Service announced on Dec. 5 that it wants to cut an estimated $3 billion in costs to avoid a bankruptcy. The proposal includes the elimination of one-day delivery and closing half of its processing centers.

10. MF Global

The bankruptcy of the commodities trading firm MF Global on Oct. 31 was the eighth largest in U.S. history. About $1.2 billion in client money went missing as the company shut its doors. Jon Corzine, former senator and governor of New Jersey who resigned as CEO on Nov. 3, said he does not know where the money is.

After making risky bets on the European debt crisis, the company's bankruptcy has "devastated thousands of customers -- including farmers, ranchers, grain elevators, small business owners and others," said Sen. Debbie Stabenow, D-Mich. A Senate hearing about the missing money took place on Dec. 13, describing outrage from lawmakers and clients.

Copyright 2011 ABC News Radio

Sunday
Oct162011

Winners and Losers in U.S. Clothing Retail

Jupiterimages/Thinkstock(NEW YORK) -- Maybe things are looking up for U.S. retailers after all, or at least some of them.

September's retail sales, announced Thursday, were better than expected, and some retailers, including apparel company Uniqlo, have aggressive plans for expansion by both quantity of stores and store size.

Uniqlo opened its second store in the United States on Friday—a whopping 89,000-square-foot, three-story flagship with cathedral ceilings and revolving mannequin displays on storied Fifth Avenue in New York City.

Its first store, which opened in New York City's bustling and trendy shopping district, SoHo, in 2006, is more than 35,000 square feet in size.

The chairman of the company, which originates from Japan, hopes Uniqlo will be the No. 1 retailer in the country, with a store in every major U.S. city, and have $50 billion in sales worldwide by 2020.

Uniqlo is currently the fourth-largest retailer in the world with $10 billion in sales, according to Chief Operating Officer Yasunobu Kyogoku. And $10 billion of that future $50 billion is expected to come from the United States.

After opening Uniqlo's third U.S. store, in its 64,000-square-foot glory, in Manhattan's Herald Square on Oct. 21, Kyogoku said Uniqlo is hoping to expand further in New York City and its outlying areas, Los Angeles, San Francisco, Chicago and all major metropolitan areas. The stores at Herald Square and Fifth Avenue will be its two largest stores in the world.

Though Uniqlo is opening stores, many other retailers across the country have been closing underperforming stores.

On Thursday, Gap Inc., which owns Banana Republic and Old Navy, said it plans a 20 percent reduction in North American Gap stores by 2013 but will expand its Gap Outlet stores.

There were 1,091 Gap stores and 22 franchise stores in North America as of July 30. But by the end of 2013, the company hopes to have 700 Gap speciality stores and 250 outlet stores.

As of July 30, Gap Inc. had 3,248 company-operated or franchised stores across 34 countries.

Bookseller Borders has declared bankruptcy while Barnes & Noble has shuttered several flagship stores—even in populous New York City.

"The days of big stores are over, in my opinion, and we'll see this trend for quite a few years to come," said Jennifer Black, CEO of the independent research firm, Jennifer Black and Associates.

Copyright 2011 ABC News Radio

Tuesday
Jul192011

Borders to Close All of Its Remaining Bookstores

Tom Pennington/Getty Images(ANN ARBOR, Mich.) -- The Borders bookstore chain, which has been struggling financially for several years, announced Monday that it will be closing for good, shutting down all of its remaining 399 stores.

The company filed for Chapter 11 bankruptcy protection in February and shuttered dozens of outlets in an attempt to survive, but had no choice but to close up shop when a bid from a private equity group fell apart last week and no other bidders came forward.

Borders Group President Mike Edwards issued a statement saying, “We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time including the rapidly changing book industry, e-reader revolution and turbulent economy have brought us to where we are now.”

The company was started as a used bookstore in 1971 by brothers Louis and Tom Borders in Ann Arbor, Michigan, where the company maintains its flagship store.  At its peak in 2003, Borders operated over 1,200 stores nationwide.

The company says liquidation sales at Borders stores could begin as early as Friday, including at Waldenbooks stores, also owned by Borders.

Copyright 2011 ABC News Radio







ABC News Radio