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The editors at Best Accounting Schools decided to research the topic of
Zombie Businesses: 4 Companies That Came Back to Life After Almost Dying
Apple
Why it was was dying:
After Apple fired Steve Jobs in 1985 Apple stopped making products that actually worked, Apple stagnated, and PCs and Windows stormed the market.
- 1989 Macintosh portable 1989
- --Weighed 16 lbs
- --no backlight made it near impossible to read
- --Price $6,500
- --discontinued in 1990
- 1993 PDA, the Newton
- --wretched performance and dismal sales
- --discontinued by Jobs in 1998
- 1995 PowerBook 5300
- --Many units were shipped already dead
- --LithIon batteries caught fire
- Recalled in 1996
- --1996 attempts to improve Mac OS failed
Back from the Dead
In 1997, Apple rehired Steve Jobs and he streamlined the business
- 1997- Operating expenses were cut nearly in half, and within months Apple was profitable again.
- --He cut Apple's product line from 15 down to 4
- --Unified sales under an exclusive national dealer
- --Rehired his old ad agency behind the unforgettable "1984" TV spot that launched the Mac.
- --Marketing was focused around a single message - "Think Different" campaign
- --Terminated licensing deals that allowed Apple clones to be made and cut profits.
- After he stopped the bleeding, he went on an innovative rampage
- --iMac 1998
- --iPod 2001
- --iTunes 2003
- --Video iPod & iPod Nano 2005
- --iPhone 2007
- --Macbook Air 2008
- --iPad 2010
Apple- net income in mil (loss): '92-'10
- '92- $530,000,000
- '93- $870,000,000
- '94- $310,000,000
- '95- $424,000,000
- '96- ($816,000,000)
- '97- ($1,045,000,000)
- '98- $309,000,000
- '99- $601,000,000
- '00- $786,000,000
- '01- ($25,000,000)
- '02- $65,000,000
- '03- $69,000,000
- '04- $276,000,000
- '05- $1,335,000,000
- '06- $1,989,000,000
- '07- $3,496,000,000
- '08- $6,119,000,000
- '09- $8,235,000,000
- '10- $14,013,000,000
- '11- $25,922,000,000
LEGO
Since 1932, LEGO was a leading toy manufacturer, but in the early 2000s, sales dropped 40% pushing bankruptcy.
Why it sucked
- Lego lost its core values:
- --Tried to combat video games by entering the multi-media world.
- --Wanted to be a lifestyle brand with its own lines of clothes and watches; it built theme parks.
- --Lego sets became too complicated, nearly doubling in avg pieces from 7,000 to 12,400.
- In 2003 sales dropped 35% in the US and 29% worldwide, accumulating $1 billion of debt and near bankruptcy
Return from the gravw
- blast back to the past - In March 2004, LEGO sold off every part of the business not integral to the core product
- sold properties in the U.S., South Korea and Australia
- sold 4 theme parks
- sold its videogames development division (now handled under licence by outside partners)
- Average Pieces per set dropped back down to 7,000
- Lego shed 1,000 employees and outsourced many of its processes, reducing numbers by a further 3,500
- Product development halved from 2 years down to 1 year
LEGO Annual Net Profit
- 2000 - (-)$147,141,500
- 2001 - (+)$62,403,000
- 2002 - (+)$55,583,000
- 2003 - (-)$159,417,500
- 2004 - (-)$329,235,500
- 2005 - (+)$36,487,000
- 2006 - (+)$219,945,000
- 2007 - (+)$175,274,000
- 2008 - (+)$230,516,000
- 2009 - (+)$375,782,000
- 2010 - (+)$633,919,000
- 2011 - (+)$709,280,000
Low: $329,235,500- 2003
High: $709,280,000- 2011
Turn around: $1,038,515,500
Today, LEGO is the most profitable and fastest growing company in the toy industry
Ford
Why it was dying: "even you can afford a ford" 1908 ad campaign>
- By 2005, Ford's corporate bonds had been downgraded to junk status, as a result of
- --high U.S. health care costs for an aging workforce,
- --soaring gasoline prices,
- --eroding market share,
- --an over dependence on declining SUV sales.
- In 2006, Toyota passed Ford in United States sales.
- [In 2006,] Ford made a desperate "bet-the-company" decision to mortgage assets, borrowing $23.6 billion
- --"a cushion to protect from a recession or other unexpected event." -Mr. Mulally, Ford's newly appointed chief executive
- 2008 - Recession brings the worst new-vehicle market in 30 years.
- Ford finished 2008 with $24 billion in cash on hand but $25.8 billion in debt.
Back from the dead
- Due to the risky "bet-the-company" foresight, Ford was the only American automaker to survive the recession without filing for bankruptcy or receiving a government bailout.
- Beat out GM and Chrysler in creating new lines of more fuel-efficient vehicles
- by refocusing on the core Ford brand and selling
- --Aston Martin,
- --Jaguar,
- --Land Rover,
- --Volvo
- Ford reduced its overall borrowing by 40% by giving cash and stock to debt holders as part of a revamping of its balance sheet.
- Ford outsold G.M. in February 2010, something that had not happened in more than 50 years [aside from a brief GM strike]
- Ford Focus is the best-selling car model in the world for the first half of 2012
- climbed to rank #9 of Fortune 500 companies
Ford Net Income (loss)
- Net Income - 2006 - ($12,600,000,000)
- Net Income - 2007 - ($2,700,000,000)
- Net Income - 2008 - ($14,498,000,000)
- Net Income - 2009 - $3,026,000,000
- Net income - 2010 $ 7,149,000,000
- Net income - 2011 $ 8,681,000,000
Low: $14,498,000,000- 2008
High: $8,681,000,000- 2011
Turn around: $ 23,179,000,000
Old Spice: "The Man Your Man Could Smell Like"
Why it was dying
- Old Spice had powerful brand loyalty...from 73 years ago. Their marketing was only appealing to an aging population. Their target audience was quite literally dying off.
Back among the living- viral success:
- "The Man Your Man Could Smell Like" ad campaign feat. football star Isaiah Mustafa
- On day 1 the campaign received almost 6 million views
- On day 2 old spice had 8 of the 11 most popular videos on youtube
- After the first week the campaign had over 40 million views
- The old spice twitter following increased 2700% to 83,000+ followers
- Facebook fan interaction was up 800%
- Oldspice.com website traffic was up 300%
- The campaign generated 1.4 billion impressions in 6 months
- From 6 months after the campaign launch:
- --Body wash sales:
- --up 11% in the last 12 months
- --up 27% in the last 6 months
- --up 55% in the last 3 months
- --up 107% in the last 1 month
- --Old spice became the #1 body wash brand for men.
