Office DepotCompanies disappear all the time. Sure, it may be news when large corporations with well-known brands go belly-up. But think about it: Businesses like Circuit City, Northwest Airlines and Countrywide are gone now.

24/7 Wall St. recently looked at a number of large American companies, some of which are owned by foreign companies, to see which will disappear in 2011. A vanishing firm may go bankrupt and its assets sold off, it may be closed after being bought by another company or it may cease to exist due to a merger.

The website looked at a variety of companies: those that are in deep trouble, the merger and acquisitions targets, firms in industries that have too many competitors for any to become highly profitable or corporations that Wall Street believes are worth more in parts than as a whole. The 19 companies below were picked from this universe, because odds they are they won't exist a year from now:

Saab USA
Saab has tried to create a renaissance of sorts. The company was sold to Netherlands specialty carmaker Spyker last year. Spyker took an awful risk, particularly in the U.S. -- because Saab is one of the few car firms that did recover when the U.S. car market expanded last year. The total number of cars and light vehicles sold in America in 2010 was up 11% to 11.6 million.

Sales of some niche brands surged. Porsche sales in the U.S. were up 29% to over 29,000. Audi sales rose 22% to over 101,000. But Saab sales collapsed -- falling 37% to 5,445. American car companies have also created new lines of vehicles that have begun to sell well, particularly in the middle market where Saab operates. The Japanese still control the lower-price, high-quality portion of the market. And Korea's Hyundai took share from nearly everyone else last year, as its sales rose over 24% to just above 538,000. There's no room in the American market for tiny operator like Saab.

Office Depot
The company is running third in a three-horse race with Office Max and Staples. Office Depot also has to compete with small business centers in Sam's Clubs and Costcos. The firm operates on razor-thin margins, while managing 1,150 locations -- which are very costly due to employee and real estate expenses. Office Depot is a strong candidate to be taken over by one of its rivals or a broader retail chain like Target.

The market is too competitive for Office Depot to stand on its own. A consolidation in the sector would allow a merged operation to cut thousands of people and close hundreds of locations. Operating margins, then, would not be so modest.

Dean Foods
The maker of dairy products like Land O'Lakes and Silk has struggled as much as any other large public company this year. The costs of raw milk, butterfat, soybeans and sugar have risen sharply. Dean Foods has also been crippled by debt. The firm's shares were down as much as 60% at one point during the last 12 months.

Despite all the bad news, hedge fund investor David Tepper bought a 7.35% stake in the company. Dean Foods shares rose 9% after the announcement. Dean has already sold its yogurt business to Schreiber Foods. And Tepper, one of the cleverest investors on Wall Street, has probably bet the balance of Dean Foods will be sold off in parts. Probably the Fresh Dairy Direct-Morningstar and WhiteWave/Alpro business units would draw the most bidders. Watch for Dean to be broken up, to satisfy debtholders and arge investors.

Frontier Airlines
The carrier is owned by Republic Airways Holdings and was bankrupt when Republic bought it in 2009. Republic recently merged another of its holdings, Midwest Air, into Frontier. Denver-based Frontier is simply too small to compete in the domestic carrier market -- which has become increasingly dominated by large airlines that are growing due to mergers.

Wall Street has also become increasingly worried about Republic's future. Its shares are down 13% over the last quarter, while shares in rival JetBlue are up 9% during the same time frame. Frontier's Milwaukee hub, which serves the East and Midwest, and its Denver hub, which serves the West, the South, and Mexico, would be valuable to a larger carrier. Airline mergers and buyouts like the Continental/United deal and Delta's takeover of Northwest are popular in the industry because they allow for personnel reductions and route cuts -- as well as trimming the number of aircraft that have to be maintained. Two airlines together can have a better margin than separately. Frontier is a buyout target; its brand is not.

Sara Lee
The company that makes Ball Park hot dogs and Jimmy Dean breakfast foods is already being circled by corporations in similar businesses and by private equity firms -- groups interested in breaking Sara Lee up. Apollo Global Management has recently considered a bid. JBS, the Brazilian meat processor, made an offer that was turned down.

Media reports say Sara Lee is in the midst of a plan to separate its coffee and meat businesses. If that happens, the new companies may be named Hillshire Farm and Pickwick Tea. A deal to sell off pieces of the firm will probably happen before midyear.

Borders
The large bookstore chain is almost gone already. The only question remaining is whether it will be dissolved or sold to a related retailer like Barnes & Noble. It appears Borders has little choice other than to go bankrupt, given its debt and cash-flow situation. Two ominous signs for the bookseller: It says it's unable to pay some of its largest publishers for their books.

Border's stock also dropped under $1 a share, a warning sign that the shares could eventually be delisted -- that is, if Borders lasts long enough. The company's 500 locations may have value to a buyer, but its name does not, being associated with little more than failure.

Gateway
Gateway was bought by Taiwanese PC giant Acer in 2007. Acer is currently the No. 3 PC company in the world after Dell and Hewlett-Packard. The buyout was not unlike the one that China-based Lenovo made of the IBM PC division. Lenovo found the IBM brand was useful for marketing in the U.S., but dropped the name in favor of its own. Lenovo saw no reason to support two brands any longer and wanted to be recognized by its corporate name in the U.S. market.

Acer, meanwhile, has become an established brand in the U.S. over the last two years, particularly for its netbooks and notebooks -- while the Gateway brand has faded. Gateway is still a stand-alone corporation but will likely disappear this year.

DollarThrifty
Dollar Thrifty has a tentative deal to be bought by Avis Budget -- but the FTC has not given the transaction final approval. If the buyout closes, then the Avis, Budget, Dollar and Thrifty car rental businesses will all be under one roof. Dollar Thrifty has lost any momentum in its efforts to expand. The company said in December that it would add 31 new franchises in the U.S. It has 1,550 locations in 81 countries worldwide.

Ironically, Dollar Thrifty is itself the result of a merger of two companies. Thrifty was owned by Chrysler and combined with Dollar in 1990. Avis should close its takeover by mid-2011

Answers Corp.
The online search firm's stock is down 40% in five years. Google, in comparison was up nearly 40% during that period. The smaller company had third-quarter revenue of only $4.5 million, which means it barely has a reason to be a public company. Operating income for the quarter was only $379,000, and its total average page views daily are about 14 million.

Answers will likely be sold to a company that could use its technology platform and unique visitor traffic. This might include one of the portals or large online content companies like News Corp. The company's market value is only $65 million, which is pocket change for a really large Web company.

E*Trade
There are too many big discount brokers in the U.S. There have been persistent rumors that E*Trade will be bought by one of its larger competitors --Charles Schwab or TDAmeritrade. The rumors even caused a large move in E*Trade's options early last month. Broker Collins Stewart downgraded E*Trade shares recently, pointing to problems with loan portfolio growth on the banking side of the online brokerage's business.

Wall Street's view of the other two discounters is much more positive. The brokerage business has been ideal for consolidation for years. Full-service brokers went through a large number of mergers and acquisitions in the 1970s, 80s and 90s. The reason for the rollups were compelling then as they are now for E*Trade. There are a number of expensive duplicate functions among these companies -- which include marketing costs, trading platforms and administration. Either Schwab or TDAmeritrade will use those economies of scale to buy E*Trade, the weakest member of the sector.


Increase your money and finance knowledge from home

Socially Responsible Investing

Invest in companies with a conscience.

View Course »

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Add a Comment

*0 / 3000 Character Maximum

212 Comments

Filter by:
wdosolaris

Yeah pundits know nothing. Making a small fortune on the OMX run!

January 29 2012 at 4:03 PM Report abuse rate up rate down Reply
drclawman4

I save this article way back when, and now its 2012 and most of these companies still exist

January 04 2012 at 4:35 PM Report abuse rate up rate down Reply
Carole

PLEASE EXPLAIN TO ME WHY AN AMERICAN COMPANY WAS NOT CHOSEN TO PRODUCE THE GENERIC FOR LIPITOR? JUST THE FACT THAT THIS DRUG IS GOING GENERIC WORRIES ME, BUT INDIA????? WE COULD SURELY USE THE JOBS HERE!!!!

July 15 2011 at 1:03 PM Report abuse rate up rate down Reply
1 reply to Carole's comment
Monroe Frazier

That's an easy question to answer. Money. It is much cheaper to have the generic made out of the states. The moral thing to do would be to produce it in America.

December 11 2011 at 6:39 PM Report abuse rate up rate down Reply
Zee Rizzla

Sarah Lee baking has already been sold out

April 21 2011 at 8:42 PM Report abuse rate up rate down Reply
nletsios

Douglas Mcintyre is one of those writers trying to make predictions without facts. His story about Saab is completely baseless. If he were well informed, he would have known that Saab sold only 5,445 vehicles last year because there were no cars to sell! GM ceased production once they announced the liquidation of Saab. When Spyker purchased the company and restarted production, inventory finally began to hit the showrooms in late fall of last year. Hence we sold over 1,000 vehicles in December alone. With the new 9-5 already on hand and the all new 9-4x due to arrive in the spring we are headed towards a very healthy recovery. Many financial analysts say that Mr. Muller (owner of Spyker) bought Saab for well below market value and it was a brilliant financial move. Its articles like this which falsely alarm the public away from quality products!! Saab is on its way to a remarkable comeback! If anyone has any questions, I will be happy to respond.
Sincerely,
Proud Owner of Mayors Saab, NYC

P.S. – Another brilliant writer predicted that Kia would be disappearing from the U.S. last year. They just so happen to be one of the best performers in the market right now with no signs of slowing down.

January 24 2011 at 3:50 PM Report abuse +2 rate up rate down Reply
leemcd222

Many of these companies are leveraged buyouts (LBOs) by Wall Street and Investment Banks. Some of them will be flipped before their staggeringly large loans come due and others will fail, gutted by the banks. Most were successful companies before their predatory LBOs (LBO bankers only seek successful companies they can suck dry). Collectively, LBO'd companies employ ~10 million Americans--so it looks like unemployment wont be looking up any time soon? For more information, see Stanion Studios' investigative satire Lady Gaga Does LBOs (baitandswitchtv):

http://www.youtube.com/watch?v=393CuT6ypYA

January 22 2011 at 1:16 PM Report abuse rate up rate down Reply
katie

Check out 24/7's similar article from 2010:
http://247wallst.com/2009/12/02/the-ten-brands-that-will-disappear-in-2010/

Borders and e-trade were on there...so was Motorola. And Fannie Mae. Not such a good track record on the predictions...

January 22 2011 at 12:44 PM Report abuse rate up rate down Reply
atomicpunk67

NWA did not go belly up. They merged with Delta (creating the largest airline). Try getting your facts straight.

January 21 2011 at 10:47 PM Report abuse rate up rate down Reply
John Holmes

Actually, Sara Lee Baking has already been sold off to a Mexican company called Bimbo. The Sara Lee brand, so far as I know, will remain. This affects only the bakery side, not the meats, and other products.

January 21 2011 at 7:05 PM Report abuse rate up rate down Reply
Coot

That Sara Lee bread was most always the freshest on the shelf,if a bit more costly.

January 21 2011 at 6:26 PM Report abuse rate up rate down Reply