6 Companies Fighting For Survival
J C Penney Co. (NYSE: JCP)• JC Penney’s sales have
been dropping steadily for some time now, with revenue down more than 40% since the 2008 peak
• The company has not turned a profit since 2011
• Further losses are projected in both 2015 and 2016
Wikipedia/Jaranda
Can J C Penney Turn Things Around?• In order for J C Penney to turn around, a couple
of things need to happen• First, the company needs to learn to capitalize on
its internet sales, which currently make up about 9% of total revenue • So far, so good, with online sales up 5.5% in FY 2014
• Also, the company’s new pricing strategies need to successfully compete with rivals
BlackBerry Ltd. (NASDAQ: BBRY)• Once a dominant force in the
smartphone market, BlackBerry has been crippled by intense competition from Apple, Samsung, and other rivals
• Since peaking in 2011, BlackBerry’s revenue has fallen by nearly two-thirds
• For fiscal year 2014, BlackBerry lost $11.18 per share (share price is less than $8
Can BlackBerry Turn Things Around?• In order to make a comeback, BlackBerry would not
only need to produce new and innovative products, but would need to convince customers to leave their iPhones and Galaxy phones
• This is unlikely, so BlackBerry is shifting its focus away from manufacturing hardware
• Instead, the company is focusing on solutions for corporations, such as its recently announced “Project Ion”
Barnes & Noble Inc. (NYSE: BKS)• Barnes & Noble’s
problem is simple: less people buy books than used to
• The Nook e-reader is losing market share, falling from 25% to 20% last year
Flickr/Sean
Can Barnes & Noble Turn Things Around?
• The long-term outlook for the bookselling industry is very negative, and the company’s dwindling e-reader market share doesn’t help
• To turn things around, B&N must…• Figure out a way to profitably price-match with rival
Amazon.com• Close its underperforming stores and boost traffic in its high-
performing stores• Stop investing so much in its Nook efforts• Continue to grow its B&N College business, which has been its
primary growth driver in recent years
Zynga (NASDAQ: ZNGA)• Down nearly 70% since
its IPO price, Zynga hasn’t capitalized on the shift to smartphone gaming
• Zynga laid off nearly 15% of its workforce in January 2014 alone
• The company is no longer the gaming leader of Facebook, historically its main revenue source
Can Zynga Turn Things Around?• To stay competitive, Zynga needs to successfully
transition from a Web-based gaming company to a mobile one
• It recently acquired developer NaturalMotion to try to accelerate this process, but there is a long way to go
RadioShack Corp. (NYSE: RSH)• RadioShack has seen its
sales plummet dramatically over the past several years
• Shares are down more than 95% from their 2007 peak
• Most recently, RadioShack missed already low earnings expectations, having lost $0.98 per share in the first quarter alone (share price is just $1.41)
Wikipedia/Eduardo P
Can Radio Shack Turn Things Around?• Perhaps the most unlikely turnaround of the
companies listed here, RadioShack needs to figure out a way to increase traffic in its stores
• Needs another main revenue stream besides mobile devices
• RadioShack needs to drastically reduce operating expenses to be able to successfully compete with the pricing power of larger competitors
Sears Holdings Corp. (NASDAQ: SHLD)
• Sears has seen revenue decline every year since 2007
• The company has lost more than $50 per share since 2012
Flickr/Mike Kalasnik
Can Sears Turn Things Around?• In order to turn around, Sears is implementing these strategies
• 106 underperforming stores closed last year• Cross-selling Sears and K-Mart’s proprietary brands• Heavy investment in “Shop your way” rewards program and Sears’
online marketplace• However, it remains to be seen if this is too little, too late
• Sears’ online marketplace has a long way to go to be competitive with Amazon.com and eBay
• Sears’ outdated look and layout of its stores may have driven away longtime customers, and it’s unclear whether this damage can be undone
Is this the best stock you can buy in 2014?
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