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Tuesday, January 15, 2013

Hated Companies in Order


J.C. Penney (JCP) went from being a mediocre national retailer with modest challenges to one of the great retail management disasters of the past few years.
Former Apple (AAPL) retail chief Ron Johnson joined J.C. Penney as chief executive 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 rapidly.
Customers defected in droves. And with its stock falling more than 40% since Johnson took over, shareholders are livid; the company has also eliminated its dividend.
"It's been a disaster, and it probably will continue to be a disaster, said retail analyst Steve Kernkraut of Durban Capital. They've made every misstep you could imagine."

Dish Network's (DISH) remarkably poor customer-service ratings show up in more than one survey. Dish further alienated itself from its customers in May 2012, 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, former and current employees called the environment created by the company's founder as a "culture of condescension and distrust."

T-Mobile USA
Last year, plans were in the works for AT&T (T) to buy the U.S. branch of this struggling wireless carrier from its parent, Deutsche Telekom (DTEGY). But AT&T cancelled those plans after the Justice Department sued to block the acquisition, saying the deal would "substantially lessen competition" in the cellphone industry. It appears that Deutsche Telekom is stuck with what is increasingly becoming the black sheep among the four biggest U.S. wireless carriers.
T-Mobile's 4G network in the United States lags the networks of its chief rivals, and its customer-satisfaction rating is tied with AT&T for last place, according to the American Customer Satisfaction Index survey.
T-Mobile plans to improve its position through a marriage with smaller wireless company MetroPCS Communications (PCS). It also plans finally to offer its customers the iPhone. These changes may be too little, too late. The company had an extraordinary net loss of almost 1.6 million 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.

Facebook (FB) alienated its shareholders in a particularly public drama that played out in many major media outlets in the United States and abroad. The company's initial public offering was one of the most widely anticipated since the dot-com bubble of 1999 and 2000, which was immediately followed by a collapse in the value of many of those offerings. In Facebook's case, it took less than three months for the stock to drop from the IPO price of $35 to below $20.
Facebook has had customer-satisfaction issues, partly due to privacy concerns. It recently did a particularly good job of alienating some of its nearly 1 billion users after it announced that it had the right to republish any and all photos in the accounts of its Instagram service (it later backtracked on that).

Citigroup (C) forced out CEO Vikram Pandit late last year after he had shepherded the bank through the financial crisis, in part by laying off thousands of employees. The bank's board may have been frustrated with the pace of cost reductions under Pandit, but that was not the board's only concern -- Pandit's handling of the sale of the company's Smith Barney unit caused Citi to write down $2.9 billion, triggering a cut in its credit ratings by Moody's.
Such actions did not endear Citi to shareholders. The recovery of Citi's shares since the global financial meltdown has been less robust than those of its major competitors. Citi's relationship with its customers has also left much to be desired. The value of Citi's brand, as measured by brand consultancy Interbrand, declined 12% last year.

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