Why are some companies hated? The answer often depends on who is asking. Corporations can anger their customers, fail their shareholders, and mistreat their employees. 24/7 Wall St. analyzed each of these angles to pick the 10 most hated companies in America.
Nothing harms the long-term reputation of a company on Wall St. more than a steep, and often unexpected drop in its share value, particularly one that offers almost no chance of recovery. The stock prices of several companies on this list lost most of their value as they posted high double digits declines. In all of these cases this means a loss of billions of dollars in market capitalization.
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This has certainly happened at Nokia Corp. (NYSE: NOK), which has been swamped by competition from Apple Inc. (NASDAQ: AAPL) and Samsung. It also happened at Hewlett-Packard Co. (NYSE: HPQ), which has been losing money for several quarters and continues to give up market share in the PC industry where it held the No.1 spot globally until recently.
Many of the most hated companies have millions of customers and tens of thousands of workers. With this kind of reach, keeping employees happy is crucial to more than just good office morale. Poor job satisfaction regularly results in low customer satisfaction.
One way to ensure low worker morale is by mass layoffs, which many of the companies on this list also have in common. American Airlines is one example. The airline, which has laid off many employees, has very unhappy workers, according to company and employee rating site Glassdoor. The bankrupt airline was also rated by airline consumer interests website Airfarewatchdog.com as having the rudest workers in the industry.
Many of the most hated companies botched product or service launches. Failures include the new layout and pricing of J.C. Penney Co. Inc. (NYSE: JCP) stores and the series of failed product releases by Nokia. As many of the problems at these companies are dependent, such failures hurt revenue, which in turn force management to cut costs — often by way of layoffs.
Several organizations might have made this list, but have had too many good things go their way in recent months. This includes Netflix Inc. (NASDAQ: NFLX), which made our list last year. Several bad decisions that hurt the company’s public relations in 2011, such as the increase in streaming fees, are well in the past. After a sharp drop in 2011, shares are finally recovering and are up more than 30% in the past three months.
It is worth noting that some of the companies on the list may have done very poorly by some measures but well by others. A few of the most hated companies have had good stock performances. Others may have satisfied customers. All of this was taken into account when the decisions for the final list were made.
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24/7 Wall St. editors reviewed a variety of metrics measuring customer satisfaction, stock performance, and employee satisfaction. This included total return to shareholders compared to the broader market and other companies in the same sector in the last year. We considered customer data from a number of sources, including Consumer Reports, the MSN Money/Zogby customer satisfaction poll, ForeSee’s Holiday E-Retail Satisfaction Index, and the University of Michigan’s American Customer Satisfaction Index. We also included employee satisfaction based on worker opinion scores recorded by Glassdoor. Finally, we considered management decisions made in the past year that hurt company image and brand value from marketing research firms BrandZ and Interbrand.
1. J.C. Penney
J.C. Penney went from being a mediocre national retailer with modest challenges to one of the great public company management disasters of the last few years. Former Apple retail chief Ron Johnson joined as CEO in November 2011, and promptly decided to radically change the chain’s pricing policy. The negative reaction was immediate. Sales fell 20% in the first full quarter after Johnson began to implement his plans, and the company continued to lose sales at a rapid rate. Customers defected in droves as a sign of their dissatisfaction with the new retail model laid out by Johnson. And with its stock falling more than 40% since Johnson joined, shareholder are also livid with the company, which has also completely eliminated its dividend. Durban Capital’s retail analyst Steve Kernkraut recently said, “It’s been a disaster, and it probably will continue to be a disaster. They’ve made every misstep you could imagine.”
2. Dish Network Corp. (NASDAQ: DISH)
Dish’s remarkably poor customer service ratings show up in more than one survey. Customers knock its record in both the ACSI and in the MSN Money/Zogby poll. In the latter, it makes the “hall of shame” as one of the 10 worst-rated companies. Dish further alienated itself from its customers last May when it dropped several channels, including AMC. Among the shows that went off the satellite service were the highly popular “Mad Men” and “Breaking Bad.” Employee ratings of their experiences at the company are as terrible of those of its customers. In a recent BusinessWeek story titled “The Meanest Company in America,” former and current employees called the environment created by the company’s founder as a “culture of condescension and distrust.” Glassdoor’s employee rating for Dish is among the worst in its entire survey that covers thousands of companies. Dish recently made an offer to buy broadband provider Clearwire, which would expand the satellite TV company’s broadband presence.
3. T-Mobile USA
Last year, plans were in the works for AT&T Inc. (NYSE: T) to buy the U.S. branch of this struggling wireless carrier from its parent company, Deutsche Telekom. In December, AT&T cancelled those plans after the Justice Department sued to block the acquisition, saying the deal would “substantially lessen competition” in the industry. It appears that Deutsche Telekom is is now stuck with what is increasingly becoming the black sheep of the big four U.S. carriers. T-Mobile’s 4G network in the U.S. lags the other three carriers, and customer satisfaction is tied with AT&T mobility as the worst among wireless carriers, according to the ACSI. T-Mobile also rated as one of the worst in customer service according to MSN/Zogby’s annual poll. T-Mobile plans to improve its position through a marriage with smaller wireless company MetroPCS. It also plans to finally offer its customers the iconic iPhone. The fact of the matter is that these changes may be too little, too late. The company had an extraordinary net loss of 1,558,000 subscribers in the first three quarters of last year, out of the roughly 33 million it had at the end of 2011. During the same time, AT&T and Verizon Wireless continued to gain customers.
4. Facebook Inc. (NASDAQ: FB)
Facebook alienated its investors in a particularly public fashion, which was played out for days in many major media outlets in the U.S. and abroad. Its IPO was one of the most widely anticipated since the dot-com public offering bubble years of 1999 and 2000, which was immediately followed by a collapse in the value of many of those offerings. From its IPO price of $35, the stock fell to below $20 in less than three months. Facebook has had customer satisfaction issues for some time, but recently did a particularly good job of alienating a portion of its nearly one billion members. According to the ACSI, Facebook is one of the most strongly disliked American companies, beaten out only by three public utilities companies. This comes in part from the company’s continuing user privacy concerns. Mark Zuckerberg’s company did not help itself in this regard in 2012, after it announced that it had the right to republish any and all photos in the accounts of its Instagram users.
5. Citigroup Inc. (NYSE: C)
Citigroup sacked CEO Vikram Pandit late last year, after he had shepherded the bank through the financial crisis and then fired thousands of workers as well. That, on its own, would be enough to destroy employee morale, but the bloodletting was not over. Pandit’s successor, Michael Corbat, said he would fire 11,000 more. The bank’s board may have been frustrated with the pace of cost reductions under Pandit, but that was not the only issue that the board apparently believed had hurt long-term shareholder value. Pandit’s mishandling of the sale of its Smith Barney unit caused Citi to write down $2.9 billion, and the action triggered a cut in its credit ratings by Moody’s. Such actions did not endear Citi to investors. The recovery of Citi’s shares since the global financial meltdown has been far worse than its major competitors. Citi’s relationship with its customers has also been awful. It took a place on the MSN Hall of Shame of the 10 worst companies in America based on customer service. Its ACSI ratings, already low, further plunged in 2012. According to Interbrand, Citi’s brand value dipped 12% last year, and is now only two-thirds that of rival J.P. Morgan Chase & Co. (NYSE: JPM).
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6. Research In Motion Ltd. (NASDAQ: RIMM)
The RIM BlackBerry was once the preeminent smartphone in America and around most of the world. According to recently released data from Comscore, its share of the market has dropped to 7.3% in the U.S. and is falling rapidly still. After the launch of the BlackBerry Storm, which was roundly criticized by consumers, RIM was unable to release a consumer product that attracted any meaningful sales. Several service outages further harmed its reputation and angered customers. In 2011, RIM launched a tablet PC — the PlayBook — in an attempt to move into that market. RIM took a $485 million writedown on unsold units. The company’s latest smartphone, the Blackberry 10, has been delayed for months. RIM’s customers have been the lucky ones, actually. The company has fired thousands of employees in an attempt to restore profits. Shareholders have fared very badly as well. RIM’s share price is off by over 20% in the last year, and 80% in the last two years. To top off these troubles, Interbrand reports the BlackBerry lost 39% of its brand value last year.
7. American Airlines
AMR, parent of American Airlines, has, in a remarkably short period of time, ruined its relationships with shareholders, bondholders, pilots, customers, suppliers, and most of its other employees. The November 2011 Chapter 11 filings of AMR virtually wiped out shareholders. Recently, American was also able to cut financial obligations to airplane manufacturers and holders of the corporation’s debt, harming the financial status of these. The company has been bickering with its pilots for months over compensation. The mass layoffs that often accompany bankruptcy proceedings began long ago. American’s image with passengers has also taken a beating. It was recently named the U.S. carrier with the rudest employees. It was also ranked the worst carrier in America based on customer service, according to the ACSI.
Nokia recently lost its long-held position as the largest handset company in the world, giving up the spot to Samsung. A greater failure for the company has been its tremendous disaster in the smartphone market, where its brand and distribution muscle should have given it some advantages. But over the last five years, starting with the year the iPhone was released, Nokia has squandered any leverage it might have had and has permanently lost a position in the rapidly growing smartphone sector — mostly to Apple and Samsung. Nokia grabbed at what was probably its only chance to become relevant in smartphones again. It formed an alliance with Microsoft to use the Windows mobile OS in its new line of products. The launch of the resulting Lumia product line was botched. Newer versions of the Lumia line have not caught on. The prices of the most recently released models have already been cut, presumably to help boost flagging demand. As Nokia has fallen behind in the smartphone race, its shareholders have had to contend with a sickening drop in the value of its shares. The stock is down 20% in the last year, and 60% in the last two years. All of these factors have contributed to a loss in one of Nokia’s most important assets — its brand value. In its 2012 report, Interbrand has the company losing 16% of its value.
9. Sears Holding Corp. (NASDAQ: SHLD)
Earlier this month, Sears CEO Lou D’Ambrosio stepped down due to “family health matters.” His legacy is one of unsuccessfully attempting to give two iconic American brands — Sears and Kmart — some stability. He leaves the company with chairman and founder Eddie Lampert, who will become the fifth CEO in seven years for the faltering retail giant. Over the past five years, Sears shares have dropped by roughly 60%. In the most recent reported quarter, the company lost nearly $500 million in the most recent quarter, and more than more than $2.8 billion in the most recent reported 12 months. Meanwhile, main competitors Target Corp. (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT) have both handily outperformed the S&P 500. According to the ACSI, the company has the second worst score of any large discount retailer, better only than Walmart. Employees of both Sears and Kmart stores also rate their experience at the company as poor.
The case against Hewlett-Packard is devastating. According to the ACSI, HP was the second worst-ranked personal computer brand in 2012. HP may also be the most mismanaged major company in the U.S., which gives shareholders a reason to turn on it as well. Five years ago, the company had annual net income of more than $8 billion. In the 12 months ending in October, HP lost $12.6 billion. The company shares are down more than 40% in the past year. Further complicating matter is HP’s acquisition in October 2011 of British data company Autonomy, which is now under investigation for fraud for misrepresenting its value. HP may have lost billions in the deal. Last year, in an attempt to restructure and stop the bleeding, the company laid off 27,000 employees, more than double any other company in 2012. Employee research firm Glassdoor reports HP is also disliked by its employees.
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