Fortune 500: 20 biggest stock losers
The stock market may have reached new highs, but not all were part of the party, including the usual suspects, J.C. Penney and IBM.
NII Holdings
Fortune 500 rank: 495
2013 revenue: $6.1 billion
2013 total return: -61.4%
As more people turned to smartphones, many traditional cellphone makers scrambled to adapt. Rather than trying to compete with new technology in the U.S., though, Nextel pushed its walkie-talkie “push-to-talk” devices in emerging markets like Brazil and Mexico, through its international division, NII Holdings.
The plan worked OK until NII’s Latin American customers switched to smartphones. While the company has recently tried expanding its 3G network capabilities, it has been bleeding money in the process, with a net loss of $1.6 billion last year following a loss of $750 million the year earlier. Even management has expressed little faith in a turnaround, warning ominously in NII’s latest annual report that bankruptcy could be in store if it can’t improve cash flow, “which could mean that debt and equity holders could lose all or part of their investment.” After the stock plummeted 67% in 2012, Wall Street has mostly left the stock for dead; it fell another 61% last year.
J.C. Penney
Fortune 500 rank: 235
2013 revenue: $13 billion
2013 total return: -53.6%
It was a tumultuous year, to say the least, for J.C. Penney. The retailer reported even bigger losses in 2013—netting a negative $1.4 billion—compared with the year before. It also replaced its CEO for the second time in two years and lost its biggest shareholder, activist investor and hedge fund manager Bill Ackman.
As revenue continued to decline under the turnaround plan of the new CEO, former Apple executive Ron Johnson, the board replaced him in the spring with none other than his predecessor, Myron Ullman, who returned to his old office less than a year and a half after being fired himself. Shares tumbled amidst the shakeups, falling below $5.
Newmont Mining
Fortune 500 rank: 327
2013 revenue: $9.9 billion
2013 total return: -48.4%
When stocks retreat, many investors buy gold; when the market does well, gold and other precious metals generally suffer. So as equities enjoyed a banner year in 2013, rising more than 30%, that spelled bad news for mining companies like Newmont, where earnings declined in line with gold prices as demand for the metals dropped off.
Newmont lost a total of nearly $2.5 billion last year, disappointing analysts’ expectations, and cut its quarterly dividend, sending shares down nearly 50%. The company now plans to lower its gold production as well as spending this year.
Cliffs Natural Resources
Fortune 500 rank: 445
2013 revenue: $6 billion
2013 total return: -30.2%
Weak demand for construction, especially in China, is bad news for the producers of iron ore, which is used to make steel. Cliffs Natural Resources, as a large U.S. iron-ore miner with a lot of China exposure, took the brunt of that hit, as investors fear a further slowdown in the Chinese market.
The company’s sales and margins declined in 2013, and in the fourth quarter profits declined more than 63%, after dropping 20% the previous quarter. With shares falling under $16, investors wondered whether the stock had finally bottomed out.
Peabody Energy
Fortune 500 rank: 365
2013 revenue: $8.3 billion
2013 total return: -25.3%
One of the largest coal miners in the world, Peabody, has been hurt lately by declining demand in emerging markets like China, which have been switching more to natural gas to generate electricity. The coal market has been left with a supply glut, lowering prices worldwide.
Adding to Peabody’s struggles, workers at one of its Australian mines went on strike last year, decreasing the company’s productivity and hitting the company’s bottom line with settlement charges. When the company forecast in December that earnings would come in as much as $80 million lower than it had previously expected, investors were not pleased, sending the stock down. And that was after earnings dropped 55% in the second quarter of 2013 compared to the previous year. In total, Peabody lost nearly $525 million last year.
FirstEnergy
Fortune 500 rank: 195
2013 revenue: $15.3 billion
2013 total return: -16.2%
Mild summer temperatures across the Northeast last year meant fewer FirstEnergy customers were using their air conditioners, leading to lower revenues at the utilities provider. Combined with unusually high regulatory costs, some of which related to damage from Hurricane Sandy and other storms, FirstEnergy’s profits declined nearly 50% in 2013.
While the company cut costs by making layoffs and reducing its dividend, share prices dropped more than 16%.
Mosaic
Fortune 500 rank: 283
2013 revenue: $11.1 billion
2013 total return: -14.9%
Fertilizer prices have fallen in recent years, as competition for foreign buyers has put pressure on producers like Mosaic. The company also had a rocky start to 2013 as it settled class-action lawsuits over whether its pricing of potash, which is used in its fertilizers, violated antitrust laws. The second half of the year just got worse for Mosaic, with earnings falling 70% in the third quarter.
As fertilizer prices continued to drag, Mosaic’s earnings wilted further. The company tried to counteract the effect by buying back stock, but share prices still declined 15%.
CenturyLink
Fortune 500 rank: 158
2013 revenue: $18.4 billion
2013 total return: -13.2%
For traditional telephone landline providers, the migration to cellphones has been tough. But CenturyLink was doing all right, or so investors thought, until it unexpectedly cut its dividend early in 2013. The stock floundered, and the announcement was only followed by more bad news, with the company reporting declines in sales of its consumer home telephone and voice services.
While CenturyLink has tried to push its newer businesses like high-speed Internet, its data hosting services haven’t taken off the way the company had hoped, which the company blamed as it swung to a big loss in the third quarter. For the year, it lost a total of $239 million, and shares dropped more than 13%.
Broadcom
Fortune 500 rank: 328
2013 revenue: $8 billion
2013 total return: -9.4%
Yet another victim of the increasingly competitive market for smartphones and tablets, Broadcom, which supplies semiconductor chips for about half of such devices including Apple iPhones, has lately struggled to preserve its market share and profit margins amid lower prices. As revenue declined, the company warned that it expected even more erosion for future quarters, while also taking on extra costs as it acquired LTE technology from Renesas Electronics.
Still, Broadcom pleasantly surprised investors in the fall when its profit increased 44% in the third quarter, and the shares managed to regain some of their earlier losses, finishing down just over 9% for the year.
Jabil Circuit
Fortune 500 rank: 155
2013 revenue: $17.2 billion
2013 total return: -8.2%
The demise of BlackBerry, while perhaps a boon to rival smartphone makers, has not been kind to Jabil, which makes the circuit boards used in the phones and other electronic equipment. Jabil has been suffering along with Blackberry, which was one of its largest customers, and is now in the process of restructuring its business.
When Jabil announced in December that it would sell off its aftermarket electronics repair business, which it had acquired in 1999, to focus on manufacturing, and at the same time lowered its earnings projections, shares crashed. A planned stock repurchase program appeased investors somewhat, but the stock still ended the year down more than 8%.
Joy Global
Fortune 500 rank: 493
2013 sales: $5.7 billion
2013 total return: -7.1%
Ever since the global commodities boom slowed last year, things have been a lot less happy for Joy Global. Sales of the company’s mining equipment have dropped as raw material prices have stumbled. And it might not just be a cyclical thing. The bulk of the company’s sales are to coal miners, which have been hurt by falling demand and concerns about pollution in China, as well as low natural gas prices in the U.S. Joy’s earnings fell 22% in fiscal year2013, which ended in October. Analysts are expecting another big drop in the company’s bottom line this year.
Calumet Specialty Products
Fortune 500 rank: 467
2013 sales: $4.7 billion
2013 total return: -6.9%
Calumet Specialty Products, which processes crude oil for a variety of industrial uses, spent 2013 upgrading a number of its plants. It may have beenthe wrong year to do renovations. Along with lost revenue from the closed facilities, Calumet got squeezed by a narrower spread between the price of crude oil and the falling demand for its waxes and lubricants. As a result, the company had its first annual loss since the latestrecession. But this year is looking up and the company’s stock is rebounding. Executives say spending on upgrades should fall dramatically this year.
Quest Diagnostics
Fortune 500 rank: 364
2013 sales: $7.5 billion
2013 total return: -6.2%
It’s not just the extras that people forgo in tough economic times. It’s medical tests, too. Or so it seems. Sales dropped at lab testing company Quest Diagnostics in 2013. Medicine is supposed to be one of those things that are recession proof. But with many people out of work, and long past the expiration of their COBRA benefits, fewer people are opting for testing. The company was also hurt by pressure from insurance companies and government officials to cut the costs of its tests. In the year ahead, ObamaCare could probably help Quest.
C.H. Robinson Worldwide
Fortune 500 rank: 220
2013 sales: $7.5 billion
2013 total return: -6.3%
C.H. Robinson offers some near literal evidence that the economic recovery is still moving along slowly. The trucking company reported disappointing earnings in 2013, which led some investors to sell the stock. Shipping volumes are up. But C.H. Robinson says it has been unable to pass along higher costs to its customers. The company said that trend is likely to continue in 2014.
Exelon
Fortune 500 rank: 119
2013 sales: $23.4 billion
2013 total return: -3.5%
The nuclear option for Exelon appears to be investing in natural gas. The U.S.’s largest operator or nuclear reactors has been hurt by low power prices, driven down by cheap natural gas and proposed plants. Exelon thought it would benefit as coal plants got shut down. But that hasn’t happened. The company now expects to spend an additional $3 billion more than planned in the next few years on developing its natural gas and wind power generation facilities.
General Cable
Fortune 500 rank: 405
2013 sales: $6.1 billion
2013 total return: -1.5%
Late last year, investors in General Cable got the full Brazilian. The company, which makes copper, aluminum and fiber optic wire, told investors that an accounting error in a Brazilian unit would force it to delay its financial statements and restate earnings going back to 2008. The mistake shocked investors and spooked lenders. Moody’s Investors Services cut the company’s credit rating. All that has made it harder and more expensive for General Cable to borrow, and hurt profits.
Barnes & Noble
Fortune 500 rank: 381
2013 sales: $7.1 billion
2013 total return: -0.9%
The Nook digital reader was supposed to save Barnes & Noble. It hasn’t. Amid losses, the book chain last year said it would sell off or spin out the division that makes the electric tablet. In July, the company’s CEO William Lynch, who had focused on developing the e-reader and media player, was gone as well. Earnings have improved recently, and shares have rebounded. The company is now focused on expanding the number of stores it has on college campuses, because college students have never heard of Amazon.
Simon Property Group
Fortune 500 rank: 479
2013 sales: $4.9 billion
2013 total return: -0.8%
The lackluster economy is still continuing to weigh on Simon Property Group, which operates malls and outlet centers around the country. The company also faced a barrage of criticism and a shareholder lawsuit after it disclosed it was paying its CEO a $120 million retention bonus. The company has recently spun off its strip mall business to focus on higher-end properties, many of which are aging and in need of a facelift. The company said it plans to spend $1 billion a year through 2016 upgrading its shopping centers.
International Business Machines
Fortune 500 rank: 23
2013 sales: $104.5 billion
2013 total return: -0.2%
The move into services that saved IBM years ago is starting to look like it won’t sustain the company forever. The computer giant’s sales from its services division fell 3% last year. It’s hardware division continues to decline. Many of the companies IBM relied on for revenue now do the work themselves. Upstarts like Salesforce.com and others have offered lower cost competing products. This time CEO Ginni Rometty is banking on its business information unit and Big Data to save the company, but other companies are trying to do the same and so far the move has only slowed IBM’s decline.
EMC
Fortune 500 rank: 128
2013 sales: $21.7 billion
2013 total return: 0.2%
EMC’s future is getting cloudier. Profit growth at the world’s largest maker of storage computers dropped dramatically in 2013. The company is struggling as corporations and individuals switch to storing more of their data in the cloud. EMC is trying to adapt, offering its own cloud-based software products, but it is still slowing sales of EMC’s more expensive servers. In January, the company said it would lay off 1,000 workers.
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